Stock Analysis

Read This Before Considering Foley Wines Limited (NZSE:FWL) For Its Upcoming NZ$0.047 Dividend

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Foley Wines Limited (NZSE:FWL) is about to trade ex-dividend in the next 4 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. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Meaning, you will need to purchase Foley Wines' shares before the 6th of October to receive the dividend, which will be paid on the 21st of October.

The upcoming dividend for Foley Wines will put a total of NZ$0.047 per share in shareholders' pockets, up from last year's total dividends of NZ$0.04. 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 Foley Wines has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for Foley Wines

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. Fortunately Foley Wines's payout ratio is modest, at just 42% of profit. A useful secondary check can be to evaluate whether Foley Wines generated enough free cash flow to afford its dividend. Foley Wines 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 Foley Wines paid out over the last 12 months.

NZSE:FWL Historic Dividend October 1st 2022

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. Fortunately for readers, Foley Wines's earnings per share have been growing at 10% a year for the past five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last seven years, Foley Wines has lifted its dividend by approximately 10% a year on average. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

The Bottom Line

Should investors buy Foley Wines for the upcoming dividend? We're glad to see the company has been improving its earnings per share while also paying out a low percentage of income. However, it's not great to see it paying out what we see as an uncomfortably high percentage of its cash flow. Overall, it's hard to get excited about Foley Wines from a dividend perspective.

On that note, you'll want to research what risks Foley Wines is facing. In terms of investment risks, we've identified 1 warning sign with Foley Wines and understanding them should be part of your investment process.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.

Valuation is complex, but we're helping make it simple.

Find out whether Foley Wines is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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Foley Wines

Foley Wines Limited, an integrated wine company, produces, markets, and sells wines in New Zealand.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Future Growth0
Past Performance5
Financial Health3

Read more about these checks in the individual report sections or in our analysis model.

Solid track record with mediocre balance sheet.