Be Sure To Check Out Oxiquim S.A. (SNSE:OXIQUIM) Before It Goes Ex-Dividend

Readers hoping to buy Oxiquim S.A. (SNSE:OXIQUIM) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date occurs one day 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 an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Accordingly, Oxiquim investors that purchase the stock on or after the 27th of May will not receive the dividend, which will be paid on the 31st of May.

The company's next dividend payment will be CL$282.00 per share, on the back of last year when the company paid a total of CL$663 to shareholders. Based on the last year's worth of payments, Oxiquim has a trailing yield of 9.2% on the current stock price of CL$7170.00. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether Oxiquim can afford its dividend, and if the dividend could grow.

See our latest analysis for Oxiquim

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. Oxiquim paid out 69% of its earnings to investors last year, a normal payout level for most businesses. A useful secondary check can be to evaluate whether Oxiquim generated enough free cash flow to afford its dividend. It distributed 50% of its free cash flow as dividends, a comfortable payout level for most companies.

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 how much of its profit Oxiquim paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. For this reason, we're glad to see Oxiquim's earnings per share have risen 11% per annum over the last five years. Oxiquim has an average payout ratio which suggests a balance between growing earnings and rewarding shareholders. 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.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Oxiquim has delivered 17% dividend growth per year on average over the past nine years. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

The Bottom Line

Has Oxiquim got what it takes to maintain its dividend payments? Oxiquim'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. Oxiquim looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

On that note, you'll want to research what risks Oxiquim is facing. Case in point: We've spotted 2 warning signs for Oxiquim you should be aware of.

If you're in the market for strong dividend payers, we recommend checking our selection of top 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.