There's A Lot To Like About Grupo Catalana Occidente's (BME:GCO) Upcoming €0.16767 Dividend

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 Grupo Catalana Occidente, S.A. (BME:GCO) is about to go ex-dividend in just 3 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. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. In other words, investors can purchase Grupo Catalana Occidente's shares before the 10th of February in order to be eligible for the dividend, which will be paid on the 12th of February.

The company's next dividend payment will be €0.16767 per share, and in the last 12 months, the company paid a total of €1.12 per share. Calculating the last year's worth of payments shows that Grupo Catalana Occidente has a trailing yield of 2.9% on the current share price of €38.50. 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 Grupo Catalana Occidente can afford its dividend, and if the dividend could grow.

View our latest analysis for Grupo Catalana Occidente

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Grupo Catalana Occidente is paying out just 10% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

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

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. If earnings fall far enough, the company could be forced to cut its dividend. Fortunately for readers, Grupo Catalana Occidente's earnings per share have been growing at 12% a year for the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last 10 years, Grupo Catalana Occidente has lifted its dividend by approximately 6.6% a year on average. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

To Sum It Up

Has Grupo Catalana Occidente got what it takes to maintain its dividend payments? When companies are growing rapidly and retaining a majority of the profits within the business, it's usually a sign that reinvesting earnings creates more value than paying dividends to shareholders. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. In summary, Grupo Catalana Occidente appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

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

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.