Should You Buy Trigano S.A. (EPA:TRI) For Its Upcoming Dividend In 3 Days?
Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Trigano S.A. (EPA:TRI) is about to trade ex-dividend in the next 3 days. If you purchase the stock on or after the 14th of January, you won't be eligible to receive this dividend, when it is paid on the 16th of January.
Trigano's next dividend payment will be €2.00 per share, and in the last 12 months, the company paid a total of €2.00 per share. Based on the last year's worth of payments, Trigano stock has a trailing yield of around 2.1% on the current share price of €95.9. If you buy this business for its dividend, you should have an idea of whether Trigano's dividend is reliable and sustainable. So we need to investigate whether Trigano can afford its dividend, and if the dividend could grow.
View our latest analysis for Trigano
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Trigano paid out just 23% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Thankfully its dividend payments took up just 39% of the free cash flow it generated, which is a comfortable payout ratio.
It's positive to see that Trigano'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?
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. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. It's encouraging to see Trigano has grown its earnings rapidly, up 51% a year for the past five years. Trigano is paying out less than half its earnings and cash flow, while simultaneously growing earnings per share at a rapid clip. Companies with growing earnings and low payout ratios are often the best long-term dividend stocks, as the company can both grow its earnings and increase the percentage of earnings that it pays out, essentially multiplying the dividend.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Trigano has delivered an average of 39% per year annual increase in its dividend, based on the past nine years of dividend payments. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.
To Sum It Up
Has Trigano got what it takes to maintain its dividend payments? Trigano has grown its earnings per share while simultaneously reinvesting in the business. Unfortunately it's cut the dividend at least once in the past nine years, but the conservative payout ratio makes the current dividend look sustainable. Trigano looks solid on this analysis overall, and we'd definitely consider investigating it more closely.
Curious what other investors think of Trigano? See what analysts are forecasting, with this visualisation of its historical and future estimated earnings and cash flow.
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.
