Be Sure To Check Out Capgemini SE (EPA:CAP) Before It Goes Ex-Dividend

It looks like Capgemini SE (EPA:CAP) is about to go ex-dividend in the next three days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order 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. Thus, you can purchase Capgemini's shares before the 30th of May in order to receive the dividend, which the company will pay on the 1st of June.

The company's next dividend payment will be €3.25 per share, on the back of last year when the company paid a total of €3.25 to shareholders. Looking at the last 12 months of distributions, Capgemini has a trailing yield of approximately 2.1% on its current stock price of €154.45. If you buy this business for its dividend, you should have an idea of whether Capgemini's dividend is reliable and sustainable. As a result, readers should always check whether Capgemini has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for Capgemini

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. That's why it's good to see Capgemini paying out a modest 36% of its earnings. A useful secondary check can be to evaluate whether Capgemini generated enough free cash flow to afford its dividend. The good news is it paid out just 18% of its free cash flow in the last year.

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?

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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. For this reason, we're glad to see Capgemini's earnings per share have risen 13% per annum over the last five years. Earnings per share have been growing rapidly and the company is retaining a majority of its earnings within the business. This will make it easier to fund future growth efforts and we think this is an attractive combination - plus the dividend can always be increased later.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Capgemini has delivered an average of 13% per year annual increase in its dividend, based on the past 10 years of dividend payments. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

Final Takeaway

Is Capgemini worth buying for its dividend? It's great that Capgemini is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. It's disappointing to see the dividend has been cut at least once in the past, but as things stand now, the low payout ratio suggests a conservative approach to dividends, which we like. Capgemini looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

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

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.