Four Days Left To Buy Orthex Oyj (HEL:ORTHEX) Before The Ex-Dividend Date

Orthex Oyj (HEL:ORTHEX) stock is about to trade ex-dividend in 4 days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the 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. Accordingly, Orthex Oyj investors that purchase the stock on or after the 10th of April will not receive the dividend, which will be paid on the 18th of April.

The company's upcoming dividend is €0.11 a share, following on from the last 12 months, when the company distributed a total of €0.21 per share to shareholders. Based on the last year's worth of payments, Orthex Oyj stock has a trailing yield of around 3.2% on the current share price of €6.66. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. We need to see whether the dividend is covered by earnings and if it's growing.

See our latest analysis for Orthex Oyj

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. Orthex Oyj paid out 54% of its earnings to investors last year, a normal payout level for most businesses. 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. It distributed 26% of its free cash flow as dividends, a comfortable payout level for most companies.

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.

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

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Readers will understand then, why we're concerned to see Orthex Oyj's earnings per share have dropped 6.4% a year over the past three years. Ultimately, when earnings per share decline, the size of the pie from which dividends can be paid, shrinks.

Given that Orthex Oyj has only been paying a dividend for a year, there's not much of a past history to draw insight from.

The Bottom Line

Should investors buy Orthex Oyj for the upcoming dividend? 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. Overall, it's not a bad combination, but we feel that there are likely more attractive dividend prospects out there.

With that being said, if dividends aren't your biggest concern with Orthex Oyj, you should know about the other risks facing this business. Every company has risks, and we've spotted 1 warning sign for Orthex Oyj you should know about.

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.

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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.