Readers hoping to buy CALIDA Holding AG (VTX:CALN) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Meaning, you will need to purchase CALIDA Holding's shares before the 25th of April to receive the dividend, which will be paid on the 27th of April.
The company's upcoming dividend is CHF1.15 a share, following on from the last 12 months, when the company distributed a total of CHF1.15 per share to shareholders. Based on the last year's worth of payments, CALIDA Holding stock has a trailing yield of around 1.4% on the current share price of CHF42.95. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether CALIDA Holding has been able to grow its dividends, or if the dividend might be cut.
Check out our latest analysis for CALIDA Holding
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. CALIDA Holding paid out a comfortable 44% 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 114% 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 CALIDA Holding'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 CALIDA Holding's ability to maintain its dividend.
Click here to see how much of its profit CALIDA Holding paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings fall far enough, the company could be forced to cut its dividend. This is why it's a relief to see CALIDA Holding earnings per share are up 6.6% per annum over the last five years. Earnings have been growing at a steady rate, but we're concerned dividend payments consumed most of the company's cash flow over the past year.