Royal Unibrew A/S (CPH:RBREW) Pays A kr.12.20 Dividend In Just Four Days

It looks like Royal Unibrew A/S (CPH:RBREW) is about to go ex-dividend in the next four days. This means that investors who purchase shares on or after the 31st of August will not receive the dividend, which will be paid on the 2nd of September.

Royal Unibrew's next dividend payment will be kr.12.20 per share. Last year, in total, the company distributed kr.12.20 to shareholders. Last year's total dividend payments show that Royal Unibrew has a trailing yield of 1.8% on the current share price of DKK668.8. 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 Royal Unibrew can afford its dividend, and if the dividend could grow.

See our latest analysis for Royal Unibrew

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Royal Unibrew is paying out an acceptable 55% of its profit, a common payout level among most companies. 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 paid out more than half (52%) of its free cash flow in the past year, which is within an average range for most companies.

It's positive to see that Royal Unibrew'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 the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. 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 Royal Unibrew's earnings per share have risen 14% per annum over the last five years. Royal Unibrew is paying out a bit over half its earnings, which suggests the company is striking a balance between reinvesting in growth, and paying dividends. This is a reasonable combination that could hint at some 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. In the past nine years, Royal Unibrew has increased its dividend at approximately 19% a year on average. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

Final Takeaway

Is Royal Unibrew an attractive dividend stock, or better left on the shelf? Higher earnings per share generally lead to higher dividends from dividend-paying stocks over the long run. That's why we're glad to see Royal Unibrew's earnings per share growing, although as we saw, the company is paying out more than half of its earnings and cashflow - 55% and 52% respectively. Overall, it's not a bad combination, but we feel that there are likely more attractive dividend prospects out there.

So while Royal Unibrew looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. For example, we've found 2 warning signs for Royal Unibrew that we recommend you consider before investing in the business.

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.

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This article by Simply Wall St is general in nature. 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.
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