We Wouldn't Be Too Quick To Buy Cnl Capital E.K.E.S. - AIFM (ATH:CNLCAP) Before It Goes Ex-Dividend

Cnl Capital E.K.E.S. - AIFM (ATH:CNLCAP) stock is about to trade ex-dividend in three days. The ex-dividend date is commonly two business days before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. 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. Accordingly, Cnl Capital E.K.E.S. - AIFM investors that purchase the stock on or after the 2nd of December will not receive the dividend, which will be paid on the 9th of December.

The company's next dividend payment will be €0.15 per share, on the back of last year when the company paid a total of €0.30 to shareholders. Based on the last year's worth of payments, Cnl Capital E.K.E.S. - AIFM stock has a trailing yield of around 4.4% on the current share price of €6.80. If you buy this business for its dividend, you should have an idea of whether Cnl Capital E.K.E.S. - AIFM's dividend is reliable and sustainable. As a result, readers should always check whether Cnl Capital E.K.E.S. - AIFM has been able to grow its dividends, or if the dividend might be cut.

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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. Cnl Capital E.K.E.S. - AIFM distributed an unsustainably high 115% of its profit as dividends to shareholders last year. Without extenuating circumstances, we'd consider the dividend at risk of a cut.

When the dividend payout ratio is high, as it is in this case, the dividend is usually at greater risk of being cut in the future.

Check out our latest analysis for Cnl Capital E.K.E.S. - AIFM

Click here to see how much of its profit Cnl Capital E.K.E.S. - AIFM paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. With that in mind, we're discomforted by Cnl Capital E.K.E.S. - AIFM's 20% per annum decline in earnings in the past five years. Such a sharp decline casts doubt on the future sustainability of the dividend.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past seven years, Cnl Capital E.K.E.S. - AIFM has increased its dividend at approximately 13% a year on average. The only way to pay higher dividends when earnings are shrinking is either to pay out a larger percentage of profits, spend cash from the balance sheet, or borrow the money. Cnl Capital E.K.E.S. - AIFM is already paying out 115% of its profits, and with shrinking earnings we think it's unlikely that this dividend will grow quickly in the future.

Final Takeaway

Is Cnl Capital E.K.E.S. - AIFM an attractive dividend stock, or better left on the shelf? Not only are earnings per share shrinking, but Cnl Capital E.K.E.S. - AIFM is paying out a disconcertingly high percentage of its profit as dividends. It's not that we hate the business, but we feel that these characeristics are not desirable for investors seeking a reliable dividend stock to own for the long term. All things considered, we're not optimistic about its dividend prospects, and would be inclined to leave it on the shelf for now.

Although, if you're still interested in Cnl Capital E.K.E.S. - AIFM and want to know more, you'll find it very useful to know what risks this stock faces. To that end, you should learn about the 5 warning signs we've spotted with Cnl Capital E.K.E.S. - AIFM (including 2 which make us uncomfortable).

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.