Groupe Minoteries SA (VTX:GMI) Is About To Go Ex-Dividend, And It Pays A 4.1% Yield

Readers hoping to buy Groupe Minoteries SA (VTX:GMI) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Meaning, you will need to purchase Groupe Minoteries' shares before the 17th of May to receive the dividend, which will be paid on the 22nd of May.

The company's next dividend payment will be CHF011.00 per share, on the back of last year when the company paid a total of CHF11.00 to shareholders. Based on the last year's worth of payments, Groupe Minoteries has a trailing yield of 4.1% on the current stock price of CHF0270.00. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. We need to see whether the dividend is covered by earnings and if it's growing.

See our latest analysis for Groupe Minoteries

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Groupe Minoteries is paying out an acceptable 56% of its profit, a common payout level among most companies. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. It paid out more than half (61%) of its free cash flow in the past year, which is within an average range for most companies.

It's positive to see that Groupe Minoteries's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

Click here to see how much of its profit Groupe Minoteries paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. With that in mind, we're not enthused to see that Groupe Minoteries's earnings per share have remained effectively flat over the past five years. Better than seeing them fall off a cliff, for sure, but the best dividend stocks grow their earnings meaningfully over the long run. Earnings per share growth has been slim, and the company is already paying out a majority of its earnings. While there is some room to both increase the payout ratio and reinvest in the business, generally the higher a payout ratio goes, the lower a company's prospects for future growth.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Groupe Minoteries has delivered an average of 8.2% per year annual increase in its dividend, based on the past 10 years of dividend payments.

Final Takeaway

Has Groupe Minoteries got what it takes to maintain its dividend payments? Earnings per share have barely grown, and although Groupe Minoteries paid out over half its earnings and free cash flow last year, the payout ratios are within a normal range for most companies. Overall, it's hard to get excited about Groupe Minoteries from a dividend perspective.

However if you're still interested in Groupe Minoteries as a potential investment, you should definitely consider some of the risks involved with Groupe Minoteries. In terms of investment risks, we've identified 2 warning signs with Groupe Minoteries and understanding them should be part of your investment process.

If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.