There's A Lot To Like About Enaex's (SNSE:ENAEX) Upcoming US$0.1833536 Dividend

It looks like Enaex S.A. (SNSE:ENAEX) is about to go ex-dividend in the next 4 days. The ex-dividend date is two business days before a company's record date in most cases, which is the date on which the company determines which shareholders are entitled to receive a 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. Accordingly, Enaex investors that purchase the stock on or after the 22nd of August will not receive the dividend, which will be paid on the 27th of August.

The company's next dividend payment will be US$0.1833536 per share, on the back of last year when the company paid a total of US$0.78 to shareholders. Based on the last year's worth of payments, Enaex has a trailing yield of 3.9% on the current stock price of CL$19350.00. If you buy this business for its dividend, you should have an idea of whether Enaex's dividend is reliable and sustainable. As a result, readers should always check whether Enaex has been able to grow its dividends, or if the dividend might be cut.

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If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Enaex paid out 54% of its earnings to investors last year, a normal payout level for most businesses. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. It distributed 46% of its free cash flow as dividends, a comfortable payout level for most companies.

It's positive to see that Enaex'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.

View our latest analysis for Enaex

Click here to see how much of its profit Enaex paid out over the last 12 months.

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 Enaex's earnings per share have risen 15% per annum over the last five years. Enaex is paying out a bit over half its earnings, which suggests the company is striking a balance between reinvesting in growth, and paying dividends. Given the quick rate of earnings per share growth and current level of payout, there may be a chance of further dividend increases in the future.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Enaex has delivered 4.9% dividend growth per year on average over the past 10 years. Earnings per share have been growing much quicker than dividends, potentially because Enaex is keeping back more of its profits to grow the business.

To Sum It Up

Is Enaex worth buying for its dividend? Enaex's growing earnings per share and conservative payout ratios make for a decent combination. We also like that it paid out a lower percentage of its cash flow. It's a promising combination that should mark this company worthy of closer attention.

In light of that, while Enaex has an appealing dividend, it's worth knowing the risks involved with this stock. For example, we've found 1 warning sign for Enaex that we recommend you consider before investing in the business.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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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.