Spinneys 1961 Holding plc (DFM:SPINNEYS) Pays A د.إ0.034 Dividend In Just Two Days
Spinneys 1961 Holding plc (DFM:SPINNEYS) is about to trade ex-dividend in the next two days. The ex-dividend date generally occurs two days 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 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 Spinneys 1961 Holding's shares on or after the 19th of August, you won't be eligible to receive the dividend, when it is paid on the 4th of September.
The company's next dividend payment will be د.إ0.034 per share, on the back of last year when the company paid a total of د.إ0.069 to shareholders. Based on the last year's worth of payments, Spinneys 1961 Holding has a trailing yield of 5.4% on the current stock price of د.إ1.29. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether Spinneys 1961 Holding can afford its dividend, and if the dividend could grow.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Spinneys 1961 Holding paid out more than half (72%) 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. Fortunately, it paid out only 40% of its free cash flow in the past year.
It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
Check out our latest analysis for Spinneys 1961 Holding
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. With that in mind, it's good to see earnings have grown 7.2% on last year. While earnings have been growing at a credible rate, the company is paying out a majority of its earnings to shareholders. Therefore it's unlikely that the company will be able to reinvest heavily in its business, which could presage slower growth in the future.
We do note though, one year is too short a time to be drawing strong conclusions about a company's future growth prospects.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last two years, Spinneys 1961 Holding has lifted its dividend by approximately 10% 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.
The Bottom Line
Is Spinneys 1961 Holding worth buying for its dividend? Earnings per share growth has been modest and Spinneys 1961 Holding paid out over half of its profits and less than half of its free cash flow, although both payout ratios are within normal limits. All things considered, we are not particularly enthused about Spinneys 1961 Holding from a dividend perspective.
Wondering what the future holds for Spinneys 1961 Holding? See what the five analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow
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.