Is It Smart To Buy Viña Concha y Toro S.A. (SNSE:CONCHATORO) Before It Goes Ex-Dividend?

It looks like Viña Concha y Toro S.A. (SNSE:CONCHATORO) is about to go ex-dividend in the next three days. Investors can purchase shares before the 18th of December in order to be eligible for this dividend, which will be paid on the 23rd of December.

Viña Concha y Toro's upcoming dividend is CL$4.00 a share, following on from the last 12 months, when the company distributed a total of CL$21.10 per share to shareholders. Last year's total dividend payments show that Viña Concha y Toro has a trailing yield of 1.7% on the current share price of CLP1232.2. 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. So we need to investigate whether Viña Concha y Toro can afford its dividend, and if the dividend could grow.

View our latest analysis for Viña Concha y Toro

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Viña Concha y Toro paid out just 23% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances.

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

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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. For this reason, we're glad to see Viña Concha y Toro's earnings per share have risen 11% per annum over the last five years. The company has managed to grow earnings at a rapid rate, while reinvesting most of the profits within the business. Fast-growing businesses that are reinvesting heavily are enticing from a dividend perspective, especially since they can often increase the payout ratio later.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Viña Concha y Toro has seen its dividend decline 1.2% per annum on average over the past 10 years, which is not great to see.

Final Takeaway

Should investors buy Viña Concha y Toro for the upcoming dividend? Companies like Viña Concha y Toro that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. We think this is a pretty attractive combination, and would be interested in investigating Viña Concha y Toro more closely.

On that note, you'll want to research what risks Viña Concha y Toro is facing. Case in point: We've spotted 1 warning sign for Viña Concha y Toro you should be aware of.

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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