Interested In Rawlplug's (WSE:RWL) Upcoming zł0.40 Dividend? You Have Four Days Left

It looks like Rawlplug S.A. (WSE:RWL) is about to go ex-dividend in the next 4 days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. 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. Thus, you can purchase Rawlplug's shares before the 13th of August in order to receive the dividend, which the company will pay on the 29th of August.

The company's next dividend payment will be zł0.40 per share, on the back of last year when the company paid a total of zł0.40 to shareholders. Calculating the last year's worth of payments shows that Rawlplug has a trailing yield of 2.7% on the current share price of zł15.05. If you buy this business for its dividend, you should have an idea of whether Rawlplug's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.

See our latest analysis for Rawlplug

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. Rawlplug paid out a comfortable 40% of its profit last year. A useful secondary check can be to evaluate whether Rawlplug generated enough free cash flow to afford its dividend. Over the last year it paid out 57% of its free cash flow as dividends, within the usual range for most companies.

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 how much of its profit Rawlplug paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If earnings fall far enough, the company could be forced to cut its dividend. That explains why we're not overly excited about Rawlplug's flat earnings over the past five years. We'd take that over an earnings decline any day, but in the long run, the best dividend stocks all grow their earnings per share.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last 10 years, Rawlplug has lifted its dividend by approximately 1.9% a year on average.

The Bottom Line

Should investors buy Rawlplug for the upcoming dividend? Its earnings per share are effectively flat in recent times. The company paid out less than half its income and more than half its cash flow as dividends to shareholders. While it does have some good things going for it, we're a bit ambivalent and it would take more to convince us of Rawlplug's dividend merits.

With that being said, if dividends aren't your biggest concern with Rawlplug, you should know about the other risks facing this business. For example, we've found 2 warning signs for Rawlplug that we recommend you consider before investing in the business.

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

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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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com