Interested In Vranken-Pommery Monopole Société Anonyme's (EPA:VRAP) Upcoming €0.80 Dividend? You Have Four Days Left

Vranken-Pommery Monopole Société Anonyme (EPA:VRAP) is about to trade ex-dividend in the next 4 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 important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Thus, you can purchase Vranken-Pommery Monopole Société Anonyme's shares before the 11th of July in order to receive the dividend, which the company will pay on the 13th of July.

The company's upcoming dividend is €0.80 a share, following on from the last 12 months, when the company distributed a total of €0.80 per share to shareholders. Last year's total dividend payments show that Vranken-Pommery Monopole Société Anonyme has a trailing yield of 4.3% on the current share price of €18.6. If you buy this business for its dividend, you should have an idea of whether Vranken-Pommery Monopole Société Anonyme's dividend is reliable and sustainable. So we need to investigate whether Vranken-Pommery Monopole Société Anonyme can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Vranken-Pommery Monopole Société Anonyme

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. Vranken-Pommery Monopole Société Anonyme paid out 70% 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. What's good is that dividends were well covered by free cash flow, with the company paying out 21% of its cash flow last year.

It's positive to see that Vranken-Pommery Monopole Société Anonyme's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

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

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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we're encouraged by the steady growth at Vranken-Pommery Monopole Société Anonyme, with earnings per share up 3.2% on average over the last five years. Earnings growth has been slim and the company is paying out more than half of its earnings. While there is some room to both increase the payout ratio and reinvest in the business, generally the higher a payout ratio goes, the lower a company's prospects for future growth.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. It looks like the Vranken-Pommery Monopole Société Anonyme dividends are largely the same as they were 10 years ago.

To Sum It Up

From a dividend perspective, should investors buy or avoid Vranken-Pommery Monopole Société Anonyme? Earnings per share growth has been modest and Vranken-Pommery Monopole Société Anonyme paid out over half of its profits and less than half of its free cash flow, although both payout ratios are within normal limits. In summary, while it has some positive characteristics, we're not inclined to race out and buy Vranken-Pommery Monopole Société Anonyme today.

While it's tempting to invest in Vranken-Pommery Monopole Société Anonyme for the dividends alone, you should always be mindful of the risks involved. For example, we've found 2 warning signs for Vranken-Pommery Monopole Société Anonyme (1 is concerning!) that deserve your attention before investing in the 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.