Swiss Prime Site AG (VTX:SPSN) Pays A CHF3.40 Dividend In Just Four Days

Swiss Prime Site AG (VTX:SPSN) is about to trade ex-dividend in the next four days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Thus, you can purchase Swiss Prime Site's shares before the 28th of March in order to receive the dividend, which the company will pay on the 30th of March.

The company's next dividend payment will be CHF3.40 per share, and in the last 12 months, the company paid a total of CHF3.40 per share. Calculating the last year's worth of payments shows that Swiss Prime Site has a trailing yield of 4.4% on the current share price of CHF77.7. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether Swiss Prime Site can afford its dividend, and if the dividend could grow.

View our latest analysis for Swiss Prime Site

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Swiss Prime Site is paying out an acceptable 64% 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 (73%) of its free cash flow in the past year, which is within an average range for most companies.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings fall far enough, the company could be forced to cut its dividend. With that in mind, we're encouraged by the steady growth at Swiss Prime Site, with earnings per share up 4.3% on average over the last five years. Earnings growth has been slim and the company is paying out more than half 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.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Swiss Prime Site's dividend payments per share have declined at 0.6% per year on average over the past 10 years, which is uninspiring.

To Sum It Up

From a dividend perspective, should investors buy or avoid Swiss Prime Site? Earnings per share have been growing modestly and Swiss Prime Site paid out a bit over half of its earnings and free cash flow last year. Overall, it's hard to get excited about Swiss Prime Site from a dividend perspective.

However if you're still interested in Swiss Prime Site as a potential investment, you should definitely consider some of the risks involved with Swiss Prime Site. Our analysis shows 3 warning signs for Swiss Prime Site that we strongly recommend you have a look at before investing in the company.

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.