Why You Might Be Interested In N. Varveris-Moda Bagno S.A. (ATH:MODA) 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 N. Varveris-Moda Bagno S.A. (ATH:MODA) is about to go ex-dividend in just 3 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 of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. This means that investors who purchase N. Varveris-Moda Bagno's shares on or after the 20th of October will not receive the dividend, which will be paid on the 24th of October.

The company's next dividend payment will be €0.0591229 per share, and in the last 12 months, the company paid a total of €0.059 per share. Last year's total dividend payments show that N. Varveris-Moda Bagno has a trailing yield of 1.1% on the current share price of €5.36. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! As a result, readers should always check whether N. Varveris-Moda Bagno has been able to grow its dividends, or if the dividend might be cut.

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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 N. Varveris-Moda Bagno paying out a modest 32% of its earnings. 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 23% of its cash flow 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.

Check out our latest analysis for N. Varveris-Moda Bagno

Click here to see how much of its profit N. Varveris-Moda Bagno paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That's why it's comforting to see N. Varveris-Moda Bagno's earnings have been skyrocketing, up 191% per annum for the past five years. N. Varveris-Moda Bagno is paying out less than half its earnings and cash flow, while simultaneously growing earnings per share at a rapid clip. This is a very favourable combination that can often lead to the dividend multiplying over the long term, if earnings grow and the company pays out a higher percentage of its earnings.

Unfortunately N. Varveris-Moda Bagno has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.

The Bottom Line

Should investors buy N. Varveris-Moda Bagno for the upcoming dividend? We love that N. Varveris-Moda Bagno is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. These characteristics suggest the company is reinvesting in growing its business, while the conservative payout ratio also implies a reduced risk of the dividend being cut in the future. N. Varveris-Moda Bagno looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

Want to learn more about N. Varveris-Moda Bagno? Here's a visualisation of its historical rate of revenue and earnings growth.

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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.