Four Days Left To Buy Viña San Pedro Tarapacá S.A. (SNSE:VSPT) Before The Ex-Dividend Date

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Viña San Pedro Tarapacá S.A. (SNSE:VSPT) is about to trade ex-dividend in the next four days. The ex-dividend date generally occurs two days 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 of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. In other words, investors can purchase Viña San Pedro Tarapacá's shares before the 25th of April in order to be eligible for the dividend, which will be paid on the 30th of April.

The company's upcoming dividend is CL$0.2402 a share, following on from the last 12 months, when the company distributed a total of CL$0.18 per share to shareholders. Based on the last year's worth of payments, Viña San Pedro Tarapacá has a trailing yield of 4.5% on the current stock price of CL$4.001. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to check whether the dividend payments are covered, and if earnings are growing.

We've discovered 2 warning signs about Viña San Pedro Tarapacá. View them for free.

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. Viña San Pedro Tarapacá paid out a comfortable 35% of its profit last year. A useful secondary check can be to evaluate whether Viña San Pedro Tarapacá generated enough free cash flow to afford its dividend. What's good is that dividends were well covered by free cash flow, with the company paying out 25% of its cash flow last year.

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.

Check out our latest analysis for Viña San Pedro Tarapacá

Click here to see how much of its profit Viña San Pedro Tarapacá 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 decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. So we're not too excited that Viña San Pedro Tarapacá's earnings are down 2.9% a year over the past five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the past 10 years, Viña San Pedro Tarapacá has increased its dividend at approximately 2.7% a year on average.

Final Takeaway

Has Viña San Pedro Tarapacá got what it takes to maintain its dividend payments? Earnings per share are down meaningfully, although at least the company is paying out a low and conservative percentage of both its earnings and cash flow. It's definitely not great to see earnings falling, but at least there may be some buffer before the dividend needs to be cut. It might be worth researching if the company is reinvesting in growth projects that could grow earnings and dividends in the future, but for now we're not all that optimistic on its dividend prospects.

So while Viña San Pedro Tarapacá looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. Be aware that Viña San Pedro Tarapacá is showing 2 warning signs in our investment analysis, and 1 of those is concerning...

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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.