Interested In Viña Concha y Toro's (SNSE:CONCHATORO) Upcoming CL$4.50 Dividend? You Have Three Days Left

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Viña Concha y Toro S.A. (SNSE:CONCHATORO) is about to trade ex-dividend in the next 3 days. 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 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 Viña Concha y Toro's shares on or after the 25th of September, you won't be eligible to receive the dividend, when it is paid on the 30th of September.

The company's next dividend payment will be CL$4.50 per share. Last year, in total, the company distributed CL$27.85 to shareholders. Last year's total dividend payments show that Viña Concha y Toro has a trailing yield of 2.5% on the current share price of CL$1100.00. If you buy this business for its dividend, you should have an idea of whether Viña Concha y Toro's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

See our latest analysis for Viña Concha y Toro

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Viña Concha y Toro paid out a comfortable 30% of its profit last year. A useful secondary check can be to evaluate whether Viña Concha y Toro generated enough free cash flow to afford its dividend. Thankfully its dividend payments took up just 39% of the free cash flow it generated, which is a comfortable payout ratio.

It's positive to see that Viña Concha y Toro'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 the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. 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 encouraged by the steady growth at Viña Concha y Toro, with earnings per share up 7.0% on average over the last five years. Management have been reinvested more than half of the company's earnings within the business, and the company has been able to grow earnings with this retained capital. Organisations that reinvest heavily in themselves typically get stronger over time, which can bring attractive benefits such as stronger earnings and dividends.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last 10 years, Viña Concha y Toro has lifted its dividend by approximately 4.0% a year on average. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

To Sum It Up

From a dividend perspective, should investors buy or avoid Viña Concha y Toro? Earnings per share have been growing moderately, and Viña Concha y Toro is paying out less than half its earnings and cash flow as dividends, which is an attractive combination as it suggests the company is investing in growth. It might be nice to see earnings growing faster, but Viña Concha y Toro is being conservative with its dividend payouts and could still perform reasonably over the long run. Viña Concha y Toro looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

While it's tempting to invest in Viña Concha y Toro for the dividends alone, you should always be mindful of the risks involved. For example, we've found 2 warning signs for Viña Concha y Toro (1 is a bit concerning!) that deserve your attention before investing in the shares.

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