Interested In L'Air Liquide S.A.'s (EPA:AI) Upcoming €2.70 Dividend? You Have 4 Days Left
It looks like L'Air Liquide S.A. (EPA:AI) is about to go ex-dividend in the next 4 days. This means that investors who purchase shares on or after the 11th of May will not receive the dividend, which will be paid on the 13th of May.
L'Air Liquide's next dividend payment will be €2.70 per share, and in the last 12 months, the company paid a total of €2.70 per share. Based on the last year's worth of payments, L'Air Liquide stock has a trailing yield of around 2.3% on the current share price of €116.65. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to check whether the dividend payments are covered, and if earnings are growing.
View our latest analysis for L'Air Liquide
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. L'Air Liquide paid out more than half (57%) of its earnings last year, which is a regular payout ratio for most companies. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Over the last year it paid out 56% of its free cash flow as dividends, within the usual range for most companies.
It's positive to see that L'Air Liquide'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 earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. This is why it's a relief to see L'Air Liquide earnings per share are up 3.5% per annum 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.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. L'Air Liquide has delivered an average of 6.5% per year annual increase in its dividend, based on the past ten years of dividend payments. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.
To Sum It Up
From a dividend perspective, should investors buy or avoid L'Air Liquide? Earnings per share have been growing modestly and L'Air Liquide paid out a bit over half of its earnings and free cash flow last year. Overall, it's hard to get excited about L'Air Liquide from a dividend perspective.
If you want to look further into L'Air Liquide, it's worth knowing the risks this business faces. Case in point: We've spotted 1 warning sign for L'Air Liquide you should be aware of.
If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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