Societatea Conpet S.A. (BVB:COTE) stock is about to trade ex-dividend in 3 days. The ex-dividend date is usually set to be one business day 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. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. In other words, investors can purchase Societatea Conpet's shares before the 7th of June in order to be eligible for the dividend, which will be paid on the 24th of June.
The company's next dividend payment will be RON6.90 per share, on the back of last year when the company paid a total of RON6.90 to shareholders. Last year's total dividend payments show that Societatea Conpet has a trailing yield of 7.5% on the current share price of RON92.4. 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! That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
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. Last year Societatea Conpet paid out 103% of its profits as dividends to shareholders, suggesting the dividend is not well covered by earnings.
Have Earnings And Dividends Been Growing?
Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. With that in mind, we're not enthused to see that Societatea Conpet's earnings per share have remained effectively flat over the past five years. It's better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Societatea Conpet has delivered an average of 5.5% per year annual increase in its dividend, based on the past 10 years of dividend payments.
To Sum It Up
Is Societatea Conpet worth buying for its dividend? Earnings per share have not grown at all and Societatea Conpet is paying out an uncomfortably high percentage of its profit as dividends. This is not an overtly appealing combination of characteristics, and we're just not that interested in this company's dividend.
With that being said, if you're still considering Societatea Conpet as an investment, you'll find it beneficial to know what risks this stock is facing. For example, we've found 3 warning signs for Societatea Conpet that we recommend you consider before investing in the business.
We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
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This article by Simply Wall St is general in nature. 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.
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