EMS-CHEMIE HOLDING AG (VTX:EMSN) Will Pay A CHF17.00 Dividend In Three Days

By
Simply Wall St
Published
August 05, 2021
SWX:EMSN
Source: Shutterstock

EMS-CHEMIE HOLDING AG (VTX:EMSN) stock is about to trade ex-dividend in 3 days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order 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. Meaning, you will need to purchase EMS-CHEMIE HOLDING's shares before the 10th of August to receive the dividend, which will be paid on the 12th of August.

The company's next dividend payment will be CHF17.00 per share. Last year, in total, the company distributed CHF17.00 to shareholders. Looking at the last 12 months of distributions, EMS-CHEMIE HOLDING has a trailing yield of approximately 1.7% on its current stock price of CHF1026. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether EMS-CHEMIE HOLDING can afford its dividend, and if the dividend could grow.

See our latest analysis for EMS-CHEMIE HOLDING

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. EMS-CHEMIE HOLDING paid out 70% of its earnings to investors last year, a normal payout level for most businesses. 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 86% of its free cash flow as dividends, which is within usual limits but will limit the company's ability to lift the dividend if there's no growth.

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.

historic-dividend
SWX:EMSN Historic Dividend August 6th 2021

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. 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 EMS-CHEMIE HOLDING, with earnings per share up 2.9% on average over the last five years. A payout ratio of 70% looks like a tacit signal from management that reinvestment opportunities in the business are low. In line with limited earnings growth in recent years, this is not the most appealing combination.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last 10 years, EMS-CHEMIE HOLDING has lifted its dividend by approximately 10% a year on average. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

The Bottom Line

Has EMS-CHEMIE HOLDING got what it takes to maintain its dividend payments? Earnings per share growth has been unremarkable, and while the company is paying out a majority of its earnings and cash flow in the form of dividends, the dividend payments don't appear excessive. All things considered, we are not particularly enthused about EMS-CHEMIE HOLDING from a dividend perspective.

Curious what other investors think of EMS-CHEMIE HOLDING? See what analysts are forecasting, with this visualisation of its historical and future estimated earnings and cash flow.

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.

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