Yahoo Finance We Wouldn't Be Too Quick To Buy Compagnie du Bois Sauvage SA (EBR:COMB) Before It Goes Ex-Dividend
Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Compagnie du Bois Sauvage SA (EBR:COMB) is about to trade ex-dividend in the next 2 days. Investors can purchase shares before the 4th of May in order to be eligible for this dividend, which will be paid on the 6th of May.
Compagnie du Bois Sauvage's upcoming dividend is €5.46 a share, following on from the last 12 months, when the company distributed a total of €7.80 per share to shareholders. Based on the last year's worth of payments, Compagnie du Bois Sauvage stock has a trailing yield of around 2.4% on the current share price of €325. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. We need to see whether the dividend is covered by earnings and if it's growing.
View our latest analysis for Compagnie du Bois Sauvage
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. Compagnie du Bois Sauvage reported a loss last year, so it's not great to see that it has continued paying a dividend.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
Click here to see how much of its profit Compagnie du Bois Sauvage paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
When earnings decline, dividend companies become much harder to analyse and own safely. If earnings fall far enough, the company could be forced to cut its dividend. Readers will understand then, why we're concerned to see Compagnie du Bois Sauvage's earnings per share have dropped 20% a year over the past five years. Such a sharp decline casts doubt on the future sustainability of the dividend.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, ten years ago, Compagnie du Bois Sauvage has lifted its dividend by approximately 1.7% a year on average.
To Sum It Up
From a dividend perspective, should investors buy or avoid Compagnie du Bois Sauvage? Not only are earnings per share shrinking, but Compagnie du Bois Sauvage is paying out a disconcertingly high percentage of its profit as dividends. It's not that we hate the business, but we feel that these characeristics are not desirable for investors seeking a reliable dividend stock to own for the long term. This is not an overtly appealing combination of characteristics, and we're just not that interested in this company's dividend.
Having said that, if you're looking at this stock without much concern for the dividend, you should still be familiar of the risks involved with Compagnie du Bois Sauvage. Our analysis shows 1 warning sign for Compagnie du Bois Sauvage and you should be aware of this before buying any shares.
If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
