Three Days Left To Buy S.N. Nuclearelectrica S.A. (BVB:SNN) Before The Ex-Dividend Date

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see S.N. Nuclearelectrica S.A. (BVB:SNN) is about to trade ex-dividend in the next three 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. 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. This means that investors who purchase S.N. Nuclearelectrica's shares on or after the 30th of May will not receive the dividend, which will be paid on the 21st of June.

The company's next dividend payment will be RON03.71601 per share, and in the last 12 months, the company paid a total of RON3.72 per share. Based on the last year's worth of payments, S.N. Nuclearelectrica stock has a trailing yield of around 7.6% on the current share price of RON049.15. 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! So we need to investigate whether S.N. Nuclearelectrica can afford its dividend, and if the dividend could grow.

See our latest analysis for S.N. Nuclearelectrica

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 S.N. Nuclearelectrica's payout ratio is modest, at just 45% of profit. A useful secondary check can be to evaluate whether S.N. Nuclearelectrica generated enough free cash flow to afford its dividend. S.N. Nuclearelectrica paid out more free cash flow than it generated - 121%, to be precise - last year, which we think is concerningly high. We're curious about why the company paid out more cash than it generated last year, since this can be one of the early signs that a dividend may be unsustainable.

S.N. Nuclearelectrica does have a large net cash position on the balance sheet, which could fund large dividends for a time, if the company so chose. Still, smart investors know that it is better to assess dividends relative to the cash and profit generated by the business. Paying dividends out of cash on the balance sheet is not long-term sustainable.

S.N. Nuclearelectrica paid out less in dividends than it reported in profits, but unfortunately it didn't generate enough cash to cover the dividend. Were this to happen repeatedly, this would be a risk to S.N. Nuclearelectrica's ability to maintain its dividend.

Click here to see how much of its profit S.N. Nuclearelectrica paid out over the last 12 months.

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 earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. It's encouraging to see S.N. Nuclearelectrica has grown its earnings rapidly, up 43% a year for the past five years. Earnings have been growing quickly, but we're concerned dividend payments consumed most of the company's cash flow over the past year.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past nine years, S.N. Nuclearelectrica has increased its dividend at approximately 32% 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.

To Sum It Up

Is S.N. Nuclearelectrica an attractive dividend stock, or better left on the shelf? 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 S.N. Nuclearelectrica from a dividend perspective.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. Our analysis shows 3 warning signs for S.N. Nuclearelectrica that we strongly recommend you have a look at before investing in the company.

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.