Income Investors Should Know That Secure Energy Services Inc. (TSE:SES) Goes Ex-Dividend Soon
Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Secure Energy Services Inc. (TSE:SES) is about to trade ex-dividend in the next 4 days. The ex-dividend date is one business day 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 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. This means that investors who purchase Secure Energy Services' shares on or after the 28th of March will not receive the dividend, which will be paid on the 15th of April.
The company's next dividend payment will be CA$0.10 per share. Last year, in total, the company distributed CA$0.40 to shareholders. Looking at the last 12 months of distributions, Secure Energy Services has a trailing yield of approximately 3.5% on its current stock price of CA$11.39. If you buy this business for its dividend, you should have an idea of whether Secure Energy Services's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
View our latest analysis for Secure Energy Services
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Secure Energy Services is paying out an acceptable 61% of its profit, a common payout level among most companies. A useful secondary check can be to evaluate whether Secure Energy Services generated enough free cash flow to afford its dividend. Over the last year it paid out 52% of its free cash flow as dividends, within the usual range for most companies.
It's positive to see that Secure Energy Services'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?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That's why it's comforting to see Secure Energy Services's earnings have been skyrocketing, up 42% per annum for the past five years. Management appears to be striking a nice balance between reinvesting for growth and paying dividends to shareholders. Earnings per share have been growing quickly and in combination with some reinvestment and a middling payout ratio, the stock may have decent dividend prospects going forwards.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the past 10 years, Secure Energy Services has increased its dividend at approximately 10% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.
The Bottom Line
Should investors buy Secure Energy Services for the upcoming dividend? Higher earnings per share generally lead to higher dividends from dividend-paying stocks over the long run. That's why we're glad to see Secure Energy Services's earnings per share growing, although as we saw, the company is paying out more than half of its earnings and cashflow - 61% and 52% respectively. In summary, it's hard to get excited about Secure Energy Services from a dividend perspective.
On that note, you'll want to research what risks Secure Energy Services is facing. Our analysis shows 1 warning sign for Secure Energy Services and you should be aware of this before buying any shares.
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.
