Income Investors Should Know That Empresas CMPC S.A. (SNSE:CMPC) Goes Ex-Dividend Soon

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Empresas CMPC S.A. (SNSE:CMPC) is about to go ex-dividend in just 4 days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Therefore, if you purchase Empresas CMPC's shares on or after the 3rd of May, you won't be eligible to receive the dividend, when it is paid on the 8th of May.

The company's upcoming dividend is US$0.0237113 a share, following on from the last 12 months, when the company distributed a total of US$0.13 per share to shareholders. Looking at the last 12 months of distributions, Empresas CMPC has a trailing yield of approximately 3.7% on its current stock price of CL$1850.00. 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! As a result, readers should always check whether Empresas CMPC has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Empresas CMPC

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. Empresas CMPC paid out a comfortable 38% of its profit last year. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Dividends consumed 71% of the company's free cash flow last year, which is within a normal range for most dividend-paying organisations.

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.

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

Have Earnings And Dividends Been Growing?

Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. It's not encouraging to see that Empresas CMPC's earnings are effectively flat over the past five years. It's better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the past 10 years, Empresas CMPC has increased its dividend at approximately 6.2% a year on average.

The Bottom Line

From a dividend perspective, should investors buy or avoid Empresas CMPC? Earnings per share are down very slightly in recent times, and Empresas CMPC paid out less half its profit and more than half its cash flow as dividends, which is not the worst combination but could be better. Overall, it's hard to get excited about Empresas CMPC from a dividend perspective.

If you're not too concerned about Empresas CMPC's ability to pay dividends, you should still be mindful of some of the other risks that this business faces. To that end, you should learn about the 5 warning signs we've spotted with Empresas CMPC (including 1 which makes us a bit uncomfortable).

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.