Should You Buy Secuoya, Grupo de Comunicación, S.A. (BME:SEC) For Its Upcoming Dividend?

Secuoya, Grupo de Comunicación, S.A. (BME:SEC) is about to trade ex-dividend in the next four days. Typically, the ex-dividend date is two business days before the record date, which is the date on which a company determines the shareholders eligible 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. This means that investors who purchase Secuoya Grupo de Comunicación's shares on or after the 18th of September will not receive the dividend, which will be paid on the 22nd of September.

The company's next dividend payment will be €0.1033371 per share, and in the last 12 months, the company paid a total of €0.37 per share. Calculating the last year's worth of payments shows that Secuoya Grupo de Comunicación has a trailing yield of 1.4% on the current share price of €27.00. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Secuoya Grupo de Comunicación has been able to grow its dividends, or if the dividend might be cut.

This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality.

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. Secuoya Grupo de Comunicación has a low and conservative payout ratio of just 12% of its income after tax. A useful secondary check can be to evaluate whether Secuoya Grupo de Comunicación generated enough free cash flow to afford its dividend. The good news is it paid out just 8.9% of its free cash flow in the last year.

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.

View our latest analysis for Secuoya Grupo de Comunicación

Click here to see how much of its profit Secuoya Grupo de Comunicación 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 earnings fall far enough, the company could be forced to cut its dividend. It's encouraging to see Secuoya Grupo de Comunicación has grown its earnings rapidly, up 92% a year for the past five years. Secuoya Grupo de Comunicación earnings per share have been sprinting ahead like the Road Runner at a track and field day; scarcely stopping even for a cheeky "beep-beep". We also like that it is reinvesting most of its profits in its business.'

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, seven years ago, Secuoya Grupo de Comunicación has lifted its dividend by approximately 1.7% a year on average. Earnings per share have been growing much quicker than dividends, potentially because Secuoya Grupo de Comunicación is keeping back more of its profits to grow the business.

Final Takeaway

Is Secuoya Grupo de Comunicación worth buying for its dividend? Secuoya Grupo de Comunicación has been growing earnings at a rapid rate, and has a conservatively low payout ratio, implying that it is reinvesting heavily in its business; a sterling combination. Secuoya Grupo de Comunicación looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

While it's tempting to invest in Secuoya Grupo de Comunicación for the dividends alone, you should always be mindful of the risks involved. In terms of investment risks, we've identified 1 warning sign with Secuoya Grupo de Comunicación and understanding them should be part of your investment process.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.