Is It Worth Considering Saga Furs Oyj (HEL:SAGCV) For Its Upcoming Dividend?

It looks like Saga Furs Oyj (HEL:SAGCV) is about to go ex-dividend in the next 3 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. 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. Therefore, if you purchase Saga Furs Oyj's shares on or after the 28th of April, you won't be eligible to receive the dividend, when it is paid on the 7th of May.

The company's next dividend payment will be €0.71 per share. Last year, in total, the company distributed €0.71 to shareholders. Last year's total dividend payments show that Saga Furs Oyj has a trailing yield of 7.1% on the current share price of €10.04. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! We need to see whether the dividend is covered by earnings and if it's growing.

We've discovered 3 warning signs about Saga Furs Oyj. View them for free.

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Last year Saga Furs Oyj paid out 98% of its profits as dividends to shareholders, suggesting the dividend is not well covered by earnings. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. The good news is it paid out just 10.0% of its free cash flow in the last year.

It's good to see that while Saga Furs Oyj's dividends were not well covered by profits, at least they are affordable from a cash perspective. Still, if this were to happen repeatedly, we'd be concerned about whether the dividend is sustainable in a downturn.

View our latest analysis for Saga Furs Oyj

Click here to see how much of its profit Saga Furs Oyj paid out over the last 12 months.

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. If earnings fall far enough, the company could be forced to cut its dividend. That's why it's comforting to see Saga Furs Oyj's earnings have been skyrocketing, up 34% per annum for the past five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Saga Furs Oyj's dividend payments are broadly unchanged compared to where they were 10 years ago.

To Sum It Up

Should investors buy Saga Furs Oyj for the upcoming dividend? Earnings per share have been rising nicely although, even though its cashflow payout ratio is low, we question why Saga Furs Oyj is paying out so much of its profit. In summary, it's hard to get excited about Saga Furs Oyj from a dividend perspective.

On that note, you'll want to research what risks Saga Furs Oyj is facing. Our analysis shows 3 warning signs for Saga Furs Oyj and you should be aware of them before buying any shares.

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.