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Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see CONSOL Energy Inc. (NYSE:CEIX) 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. In other words, investors can purchase CONSOL Energy's shares before the 15th of November in order to be eligible for the dividend, which will be paid on the 26th of November.
The company's next dividend payment will be US$0.25 per share, and in the last 12 months, the company paid a total of US$1.00 per share. Looking at the last 12 months of distributions, CONSOL Energy has a trailing yield of approximately 0.8% on its current stock price of US$128.02. If you buy this business for its dividend, you should have an idea of whether CONSOL Energy's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.
Check out our latest analysis for CONSOL Energy
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. CONSOL Energy is paying out just 1.8% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. 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. It paid out 2.2% of its free cash flow as dividends last year, which is conservatively low.
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?
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 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 CONSOL Energy's earnings have been skyrocketing, up 21% per annum for the past five years. CONSOL Energy looks like a real growth company, with earnings per share growing at a cracking pace and the company reinvesting most of its profits in the business.