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Rogers Communications Inc. (TSE:RCI.B) is about to trade ex-dividend in the next 4 days. 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. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Meaning, you will need to purchase Rogers Communications' shares before the 8th of December to receive the dividend, which will be paid on the 3rd of January.
The company's next dividend payment will be CA$0.50 per share, on the back of last year when the company paid a total of CA$2.00 to shareholders. Last year's total dividend payments show that Rogers Communications has a trailing yield of 3.2% on the current share price of CA$62.24. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
See our latest analysis for Rogers Communications
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Rogers Communications is paying out an acceptable 64% of its profit, a common payout level among most companies. A useful secondary check can be to evaluate whether Rogers Communications generated enough free cash flow to afford its dividend. Over the last year, it paid out more than three-quarters (78%) of its free cash flow generated, which is fairly high and may be starting to limit reinvestment in the business.
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.
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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. For this reason, we're glad to see Rogers Communications's earnings per share have risen 14% per annum over the last five years. The company paid out most of its earnings as dividends over the last year, even though business is booming and earnings per share are growing rapidly. Higher earnings generally bode well for growing dividends, although with seemingly strong growth prospects we'd wonder why management are not reinvesting more in the business.