Why You Might Be Interested In Inversiones Tricahue S.A. (SNSE:TRICAHUE) For Its Upcoming Dividend

Readers hoping to buy Inversiones Tricahue S.A. (SNSE:TRICAHUE) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Therefore, if you purchase Inversiones Tricahue's shares on or after the 17th of January, you won't be eligible to receive the dividend, when it is paid on the 22nd of January.

The company's next dividend payment will be CL$27.10 per share, on the back of last year when the company paid a total of CL$76.62 to shareholders. Based on the last year's worth of payments, Inversiones Tricahue stock has a trailing yield of around 8.6% on the current share price of CLP890.1. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether Inversiones Tricahue has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Inversiones Tricahue

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. It paid out 78% of its earnings as dividends last year, which is not unreasonable, but limits reinvestment in the business and leaves the dividend vulnerable to a business downturn. It could become a concern if earnings started to decline.

Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.

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 strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That's why it's comforting to see Inversiones Tricahue's earnings have been skyrocketing, up 21% per annum for the past five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Inversiones Tricahue's dividend payments per share have declined at 9.2% per year on average over the past 10 years, which is uninspiring. Inversiones Tricahue is a rare case where dividends have been decreasing at the same time as earnings per share have been improving. It's unusual to see, and could point to unstable conditions in the core business, or more rarely an intensified focus on reinvesting profits.

The Bottom Line

Should investors buy Inversiones Tricahue for the upcoming dividend? Earnings per share are growing at an attractive rate, and Inversiones Tricahue is paying out a bit over half its profits. We think this is a pretty attractive combination, and would be interested in investigating Inversiones Tricahue more closely.

In light of that, while Inversiones Tricahue has an appealing dividend, it's worth knowing the risks involved with this stock. For example - Inversiones Tricahue has 2 warning signs we think you should be aware of.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.