S.N. Nuclearelectrica S.A. (BVB:SNN) Pays A RON1.57 Dividend In Just Three Days

By
Simply Wall St
Published
June 02, 2021
BVB:SNN
Source: Shutterstock

S.N. Nuclearelectrica S.A. (BVB:SNN) is about to trade ex-dividend in the next 3 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. Meaning, you will need to purchase S.N. Nuclearelectrica's shares before the 7th of June to receive the dividend, which will be paid on the 25th of June.

The company's next dividend payment will be RON1.57 per share. Last year, in total, the company distributed RON1.57 to shareholders. Based on the last year's worth of payments, S.N. Nuclearelectrica has a trailing yield of 5.4% on the current stock price of RON28.85. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to check whether the dividend payments are covered, and if earnings are growing.

See our latest analysis for S.N. Nuclearelectrica

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. S.N. Nuclearelectrica paid out 67% of its earnings to investors last year, a normal payout level for most businesses. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. Dividends consumed 50% of the company's free cash flow last year, which is within a normal range for most dividend-paying organisations.

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 the company's payout ratio, plus analyst estimates of its future dividends.

historic-dividend
BVB:SNN Historic Dividend June 3rd 2021

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. It's encouraging to see S.N. Nuclearelectrica has grown its earnings rapidly, up 36% a year for the past five years. The current payout ratio suggests a good balance between rewarding shareholders with dividends, and reinvesting in growth. With a reasonable payout ratio, profits being reinvested, and some earnings growth, S.N. Nuclearelectrica could have strong prospects for future increases to the dividend.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. S.N. Nuclearelectrica has delivered 32% dividend growth per year on average over the past six years. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

To Sum It Up

Should investors buy S.N. Nuclearelectrica for the upcoming dividend? It's good to see earnings are growing, since all of the best dividend stocks grow their earnings meaningfully over the long run. However, we'd also note that S.N. Nuclearelectrica is paying out more than half of its earnings and cash flow as profits, which could limit the dividend growth if earnings growth slows. Overall, it's not a bad combination, but we feel that there are likely more attractive dividend prospects out there.

While it's tempting to invest in S.N. Nuclearelectrica for the dividends alone, you should always be mindful of the risks involved. Be aware that S.N. Nuclearelectrica is showing 2 warning signs in our investment analysis, and 1 of those is a bit unpleasant...

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.

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