Interested In Inversiones Unespa's (SNSE:UNESPA) Upcoming CL$3.00 Dividend? You Have Four Days Left
It looks like Inversiones Unespa S.A. (SNSE:UNESPA) is about to go ex-dividend in the next 4 days. Typically, the ex-dividend date is two business days 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 an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Meaning, you will need to purchase Inversiones Unespa's shares before the 15th of December to receive the dividend, which will be paid on the 18th of December.
The company's next dividend payment will be CL$3.00 per share. Last year, in total, the company distributed CL$29.10 to shareholders. Based on the last year's worth of payments, Inversiones Unespa has a trailing yield of 7.5% on the current stock price of CL$386.00. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Inversiones Unespa paid out more than half (61%) 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 95% of its free cash flow in the form of dividends last year, which is outside the comfort zone for most businesses. Companies usually need cash more than they need earnings - expenses don't pay themselves - so it's not great to see it paying out so much of its cash flow.
Inversiones Unespa 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 Inversiones Unespa's ability to maintain its dividend.
Check out our latest analysis for Inversiones Unespa
Click here to see how much of its profit Inversiones Unespa paid out over the last 12 months.
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 earnings fall far enough, the company could be forced to cut its dividend. Fortunately for readers, Inversiones Unespa's earnings per share have been growing at 11% a year for the past five years. Earnings have been growing at a decent rate, but we're concerned dividend payments consumed most of the company's cash flow over the past year.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Inversiones Unespa's dividend payments per share have declined at 1.9% per year on average over the past 10 years, which is uninspiring.
To Sum It Up
Has Inversiones Unespa got what it takes to maintain its dividend payments? It's good to see that earnings per share are growing and that the company's payout ratio is within a normal range for most businesses. However we're somewhat concerned that it paid out 95% of its cashflow, which is uncomfortably high. To summarise, Inversiones Unespa looks okay on this analysis, although it doesn't appear a stand-out opportunity.
However if you're still interested in Inversiones Unespa as a potential investment, you should definitely consider some of the risks involved with Inversiones Unespa. We've identified 3 warning signs with Inversiones Unespa (at least 2 which shouldn't be ignored), and understanding these should be part of your investment process.
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.