Flour Mills Kepenos (ATH:KEPEN) Could Be A Buy For Its Upcoming Dividend

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Flour Mills Kepenos S.A. (ATH:KEPEN) is about to go ex-dividend in just three days. The ex-dividend date is one business day 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. 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. In other words, investors can purchase Flour Mills Kepenos' shares before the 23rd of August in order to be eligible for the dividend, which will be paid on the 29th of August.

The company's next dividend payment will be €0.047 per share. Last year, in total, the company distributed €0.047 to shareholders. Looking at the last 12 months of distributions, Flour Mills Kepenos has a trailing yield of approximately 1.8% on its current stock price of €2.68. 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 investigate whether Flour Mills Kepenos can afford its dividend, and if the dividend could grow.

See our latest analysis for Flour Mills Kepenos

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Flour Mills Kepenos paid out a comfortable 33% of its profit last year. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. Flour Mills Kepenos paid a dividend despite reporting negative free cash flow last year. That's typically a bad combination and - if this were more than a one-off - not sustainable.

Click here to see how much of its profit Flour Mills Kepenos paid out over the last 12 months.

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 fall far enough, the company could be forced to cut its dividend. It's encouraging to see Flour Mills Kepenos has grown its earnings rapidly, up 24% a year for the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Flour Mills Kepenos's dividend payments per share have declined at 12% per year on average over the past nine years, which is uninspiring. Flour Mills Kepenos is a rare case where dividends have been decreasing at the same time as earnings per share have been improving. It's unusual to see, and could point to unstable conditions in the core business, or more rarely an intensified focus on reinvesting profits.

The Bottom Line

Is Flour Mills Kepenos an attractive dividend stock, or better left on the shelf? We like that Flour Mills Kepenos has been successfully growing its earnings per share at a nice rate and reinvesting most of its profits in the business. However, we note the high cashflow payout ratio with some concern. In summary, it's hard to get excited about Flour Mills Kepenos from a dividend perspective.

On that note, you'll want to research what risks Flour Mills Kepenos is facing. Our analysis shows 2 warning signs for Flour Mills Kepenos that we strongly recommend you have a look at before investing in the company.

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.