Read This Before Considering Inversiones Tricahue S.A. (SNSE:TRICAHUE) For Its Upcoming CL$21.00 Dividend

Inversiones Tricahue S.A. (SNSE:TRICAHUE) is about to trade ex-dividend in the next 3 days. If you purchase the stock on or after the 25th of January, you won't be eligible to receive this dividend, when it is paid on the 29th of January.

Inversiones Tricahue's next dividend payment will be CL$21.00 per share, and in the last 12 months, the company paid a total of CL$71.32 per share. Last year's total dividend payments show that Inversiones Tricahue has a trailing yield of 9.5% on the current share price of CLP750. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Inversiones Tricahue has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for Inversiones Tricahue

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. Fortunately Inversiones Tricahue's payout ratio is modest, at just 38% of profit.

When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.

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

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If earnings fall far enough, the company could be forced to cut its dividend. Readers will understand then, why we're concerned to see Inversiones Tricahue's earnings per share have dropped 9.0% a year over the past five years. Ultimately, when earnings per share decline, the size of the pie from which dividends can be paid, shrinks.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Inversiones Tricahue's dividend payments per share have declined at 5.9% per year on average over the past 10 years, which is uninspiring. While it's not great that earnings and dividends per share have fallen in recent years, we're encouraged by the fact that management has trimmed the dividend rather than risk over-committing the company in a risky attempt to maintain yields to shareholders.

To Sum It Up

Is Inversiones Tricahue an attractive dividend stock, or better left on the shelf? Earnings per share have shrunk noticeably in recent years, although we like that the company has a low payout ratio. This could suggest a cut to the dividend may not be a major risk in the near future. At best we would put it on a watch-list to see if business conditions improve, as it doesn't look like a clear opportunity right now.

If you're not too concerned about Inversiones Tricahue's ability to pay dividends, you should still be mindful of some of the other risks that this business faces. For example, Inversiones Tricahue has 4 warning signs (and 1 which is potentially serious) we think you should know about.

If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.

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This article by Simply Wall St is general in nature. 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.
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