Four Days Left Until SALUS, Ljubljana, d. d. (LJSE:SALR) Trades Ex-Dividend

SALUS, Ljubljana, d. d. (LJSE:SALR) is about to trade ex-dividend in the next 4 days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Meaning, you will need to purchase SALUS Ljubljana d. d's shares before the 9th of January to receive the dividend, which will be paid on the 11th of January.

The company's next dividend payment will be €35.00 per share, on the back of last year when the company paid a total of €70.00 to shareholders. Looking at the last 12 months of distributions, SALUS Ljubljana d. d has a trailing yield of approximately 3.9% on its current stock price of €1800. If you buy this business for its dividend, you should have an idea of whether SALUS Ljubljana d. d's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

View our latest analysis for SALUS Ljubljana d. d

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. SALUS Ljubljana d. d paid out more than half (65%) of its earnings last year, which is a regular payout ratio for most companies. 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. It paid out 108% of its free cash flow in the form of dividends last year, which is outside the comfort zone for most businesses. Cash flows are usually much more volatile than earnings, so this could be a temporary effect - but we'd generally want to look more closely here.

While SALUS Ljubljana d. d's dividends were covered by the company's reported profits, cash is somewhat more important, so it's not great to see that the company didn't generate enough cash to pay its dividend. Cash is king, as they say, and were SALUS Ljubljana d. d to repeatedly pay dividends that aren't well covered by cashflow, we would consider this a warning sign.

Click here to see how much of its profit SALUS Ljubljana d. d paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That's why it's comforting to see SALUS Ljubljana d. d's earnings have been skyrocketing, up 23% per annum 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.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the past 10 years, SALUS Ljubljana d. d has increased its dividend at approximately 8.8% a year on average. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

Final Takeaway

Is SALUS Ljubljana d. d worth buying for its dividend? Earnings per share growth is a positive, and the company's payout ratio looks normal. However, we note SALUS Ljubljana d. d paid out a much higher percentage of its free cash flow, which makes us uncomfortable. Overall, it's hard to get excited about SALUS Ljubljana d. d from a dividend perspective.

However if you're still interested in SALUS Ljubljana d. d as a potential investment, you should definitely consider some of the risks involved with SALUS Ljubljana d. d. To help with this, we've discovered 3 warning signs for SALUS Ljubljana d. d (1 can't be ignored!) 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.