Four Days Left Until Rocky Brands, Inc. (NASDAQ:RCKY) Trades Ex-Dividend

Readers hoping to buy Rocky Brands, Inc. (NASDAQ:RCKY) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. 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 important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. This means that investors who purchase Rocky Brands' shares on or after the 3rd of March will not receive the dividend, which will be paid on the 17th of March.

The company's upcoming dividend is US$0.155 a share, following on from the last 12 months, when the company distributed a total of US$0.62 per share to shareholders. Based on the last year's worth of payments, Rocky Brands has a trailing yield of 2.6% on the current stock price of US$23.58. If you buy this business for its dividend, you should have an idea of whether Rocky Brands's dividend is reliable and sustainable. As a result, readers should always check whether Rocky Brands has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Rocky Brands

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 Rocky Brands's payout ratio is modest, at just 35% of profit. 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. The good news is it paid out just 6.9% of its free cash flow in the last year.

It's positive to see that Rocky Brands'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.

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

Have Earnings And Dividends Been Growing?

Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That explains why we're not overly excited about Rocky Brands's flat earnings over the past five years. We'd take that over an earnings decline any day, but in the long run, the best dividend stocks all grow their earnings per share.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last 10 years, Rocky Brands has lifted its dividend by approximately 4.5% a year on average.

To Sum It Up

Should investors buy Rocky Brands for the upcoming dividend? Earnings per share have been flat, although at least the company is paying out a low and conservative percentage of both its earnings and cash flow. It's definitely not great to see earnings falling, but at least there may be some buffer before the dividend gets cut. Overall, it's hard to get excited about Rocky Brands from a dividend perspective.

On that note, you'll want to research what risks Rocky Brands is facing. Our analysis shows 2 warning signs for Rocky Brands and you should be aware of these before buying any shares.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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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.