Just Three Days Till Miquel y Costas & Miquel, S.A. (BME:MCM) Will Be Trading Ex-Dividend
Miquel y Costas & Miquel, S.A. (BME:MCM) is about to trade ex-dividend in the next three days. The ex-dividend date is commonly two business days before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is important as the process of settlement involves at least two full business days. So if you miss that date, you would not show up on the company's books on the record date. Therefore, if you purchase Miquel y Costas & Miquel's shares on or after the 14th of July, you won't be eligible to receive the dividend, when it is paid on the 16th of July.
The company's upcoming dividend is €0.107325 a share, following on from the last 12 months, when the company distributed a total of €0.48 per share to shareholders. Calculating the last year's worth of payments shows that Miquel y Costas & Miquel has a trailing yield of 3.4% on the current share price of €14.10. 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! That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Miquel y Costas & Miquel paid out a comfortable 30% of its profit last year. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. Over the past year it paid out 154% of its free cash flow as dividends, which is uncomfortably 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.
While Miquel y Costas & Miquel'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. Were this to happen repeatedly, this would be a risk to Miquel y Costas & Miquel's ability to maintain its dividend.
See our latest analysis for Miquel y Costas & Miquel
Click here to see how much of its profit Miquel y Costas & Miquel paid out over the last 12 months.
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. If earnings fall far enough, the company could be forced to cut its dividend. It's not encouraging to see that Miquel y Costas & Miquel's earnings are effectively flat over the past five years. Better than seeing them fall off a cliff, for sure, but the best dividend stocks grow their earnings meaningfully over the long run. Earnings have been growing somewhat, 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. Since the start of our data, eight years ago, Miquel y Costas & Miquel has lifted its dividend by approximately 11% a year on average.
The Bottom Line
Should investors buy Miquel y Costas & Miquel for the upcoming dividend? Earnings per share have been effectively flat over this time, and Miquel y Costas & Miquel's paying out less than half its profits and 154% of its cash flow. It's not common to see a company paying out a limited amount of its profits yet a substantially higher percentage of its cash flow, so we'd flag this as a concern. To summarise, Miquel y Costas & Miquel looks okay on this analysis, although it doesn't appear a stand-out opportunity.
However if you're still interested in Miquel y Costas & Miquel as a potential investment, you should definitely consider some of the risks involved with Miquel y Costas & Miquel. For example, Miquel y Costas & Miquel has 2 warning signs (and 1 which is potentially serious) we think you should know about.
If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.