Only Four Days Left To Cash In On REN - Redes Energéticas Nacionais SGPS' (ELI:RENE) Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see REN - Redes Energéticas Nacionais, SGPS, S.A. (ELI:RENE) is about to trade ex-dividend in the next 4 days. The ex-dividend date is usually set to be two business days before the record date, which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the 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 REN - Redes Energéticas Nacionais SGPS' shares before the 9th of May in order to receive the dividend, which the company will pay on the 13th of May.

The company's next dividend payment will be €0.093 per share, and in the last 12 months, the company paid a total of €0.15 per share. Based on the last year's worth of payments, REN - Redes Energéticas Nacionais SGPS has a trailing yield of 5.5% on the current stock price of €2.875. If you buy this business for its dividend, you should have an idea of whether REN - Redes Energéticas Nacionais SGPS's dividend is reliable and sustainable. As a result, readers should always check whether REN - Redes Energéticas Nacionais SGPS has been able to grow its dividends, or if the dividend might be cut.

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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. REN - Redes Energéticas Nacionais SGPS paid out 68% of its earnings to investors last year, a normal payout level for most businesses. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Fortunately, it paid out only 32% of its free cash flow in the past year.

It's positive to see that REN - Redes Energéticas Nacionais SGPS's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

See our latest analysis for REN - Redes Energéticas Nacionais SGPS

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

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. This is why it's a relief to see REN - Redes Energéticas Nacionais SGPS earnings per share are up 5.1% per annum over the last five years. While earnings have been growing at a credible rate, the company is paying out a majority of its earnings to shareholders. Therefore it's unlikely that the company will be able to reinvest heavily in its business, which could presage slower growth in the future.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. REN - Redes Energéticas Nacionais SGPS's dividend payments per share have declined at 0.9% per year on average over the past 10 years, which is uninspiring.

Final Takeaway

Should investors buy REN - Redes Energéticas Nacionais SGPS for the upcoming dividend? While earnings per share growth has been modest, REN - Redes Energéticas Nacionais SGPS's dividend payouts are around an average level; without a sharp change in earnings we feel that the dividend is likely somewhat sustainable. Pleasingly the company paid out a conservatively low percentage of its free cash flow. Overall, it's hard to get excited about REN - Redes Energéticas Nacionais SGPS from a dividend perspective.

On that note, you'll want to research what risks REN - Redes Energéticas Nacionais SGPS is facing. To help with this, we've discovered 3 warning signs for REN - Redes Energéticas Nacionais SGPS (1 is a bit unpleasant!) that you ought to be aware of before buying the shares.

If you're in the market for strong dividend payers, we recommend checking our selection of top 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.