Rocky Brands, Inc. (NASDAQ:RCKY) Stock Goes Ex-Dividend In Just Three Days

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Rocky Brands, Inc. (NASDAQ:RCKY) is about to trade ex-dividend in the next three days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a 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. Accordingly, Rocky Brands investors that purchase the stock on or after the 3rd of June will not receive the dividend, which will be paid on the 17th of June.

The company's next dividend payment will be US$0.155 per share. Last year, in total, the company distributed US$0.62 to shareholders. Based on the last year's worth of payments, Rocky Brands stock has a trailing yield of around 1.7% on the current share price of US$35.55. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Rocky Brands has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Rocky Brands

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Rocky Brands paid out a comfortable 34% of its profit last year. 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. What's good is that dividends were well covered by free cash flow, with the company paying out 6.9% of its cash flow 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. 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. Rocky Brands has delivered an average of 4.5% per year annual increase in its dividend, based on the past 10 years of dividend payments.

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. To summarise, Rocky Brands looks okay on this analysis, although it doesn't appear a stand-out opportunity.

On that note, you'll want to research what risks Rocky Brands is facing. Be aware that Rocky Brands is showing 4 warning signs in our investment analysis, and 2 of those are potentially serious...

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield 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.