Four Days Left Until Puuilo Oyj (HEL:PUUILO) Trades Ex-Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Puuilo Oyj (HEL:PUUILO) 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. Accordingly, Puuilo Oyj investors that purchase the stock on or after the 15th of October will not receive the dividend, which will be paid on the 23rd of October.

The company's upcoming dividend is €0.35 a share, following on from the last 12 months, when the company distributed a total of €0.46 per share to shareholders. Calculating the last year's worth of payments shows that Puuilo Oyj has a trailing yield of 3.3% on the current share price of €14.13. If you buy this business for its dividend, you should have an idea of whether Puuilo Oyj's dividend is reliable and sustainable. So we need to investigate whether Puuilo Oyj can afford its dividend, and if the dividend could grow.

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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. Puuilo Oyj paid out more than half (74%) of its earnings last year, which is a regular payout ratio for most companies. 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 paid out 76% of its free cash flow as dividends, which is within usual limits but will limit the company's ability to lift the dividend if there's no growth.

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 Puuilo Oyj

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

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 decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. It's encouraging to see Puuilo Oyj has grown its earnings rapidly, up 27% a year 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. In the past four years, Puuilo Oyj has increased its dividend at approximately 11% 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.

To Sum It Up

Is Puuilo Oyj worth buying for its dividend? It's good to see earnings are growing, since all of the best dividend stocks grow their earnings meaningfully over the long run. That's why we're glad to see Puuilo Oyj's earnings per share growing, although as we saw, the company is paying out more than half of its earnings and cashflow - 74% and 76% respectively. In summary, while it has some positive characteristics, we're not inclined to race out and buy Puuilo Oyj today.

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

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.