Empresas Tricot S.A. (SNSE:TRICOT) Will Pay A CL$12.936366 Dividend In Four Days

Empresas Tricot S.A. (SNSE:TRICOT) is about to trade ex-dividend in the next four 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. Accordingly, Empresas Tricot investors that purchase the stock on or after the 21st of March will not receive the dividend, which will be paid on the 26th of March.

The company's upcoming dividend is CL$12.936366 a share, following on from the last 12 months, when the company distributed a total of CL$0.62 per share to shareholders. Looking at the last 12 months of distributions, Empresas Tricot has a trailing yield of approximately 4.5% on its current stock price of CL$330.00. If you buy this business for its dividend, you should have an idea of whether Empresas Tricot's dividend is reliable and sustainable. So we need to investigate whether Empresas Tricot can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Empresas Tricot

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Empresas Tricot paid out more than half (60%) of its earnings last year, which is a regular payout ratio for most companies. A useful secondary check can be to evaluate whether Empresas Tricot generated enough free cash flow to afford its dividend. It paid out 20% of its free cash flow as dividends last year, which is conservatively low.

It's positive to see that Empresas Tricot'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.

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

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we're discomforted by Empresas Tricot's 8.5% per annum decline in earnings in the past five years. Ultimately, when earnings per share decline, the size of the pie from which dividends can be paid, shrinks.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Empresas Tricot has delivered 1.3% dividend growth per year on average over the past seven years.

The Bottom Line

Has Empresas Tricot got what it takes to maintain its dividend payments? We're not enthused by the declining earnings per share, although at least the company's payout ratio is within a reasonable range, meaning it may not be at imminent risk of a dividend cut. All things considered, we are not particularly enthused about Empresas Tricot from a dividend perspective.

With that being said, if dividends aren't your biggest concern with Empresas Tricot, you should know about the other risks facing this business. For example - Empresas Tricot has 1 warning sign we think you should be aware of.

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.