Wine Estates Limited Treasury (ASX: TWE) is set to trade ex-dividend within the next four days. The ex-dividend date is a business day before a company’s registration date, which is the date the company determines which shareholders are entitled to receive a dividend. It is important to know the ex-dividend date because any transaction in the share must have been settled by the registration date at the latest. As a result, investors in Treasury Wine Estates who purchase the shares on or after September 1 will not receive the dividend, which will be paid on October 1.
The company’s next dividend payment will be AU $ 0.13 per share. Last year, in total, the company distributed AU $ 0.28 to shareholders. Calculating the value of payments from last year shows that Treasury Wine Estates has a 2.2% return on the current share price of AU $ 12.45. Dividends are an important source of income for many shareholders, but the health of the business is crucial to sustaining these dividends. Accordingly, readers should always check whether Treasury Wine Estates has been able to increase its dividends or if the dividend could be reduced.
Check out our latest review for Treasury Wine Estates
Dividends are usually paid out of the company’s profits, so if a company pays more than it earned, its dividend is usually at risk of being reduced. It paid out 81% of its profits as dividends last year, which is not unreasonable, but limits reinvestment in the company and leaves the dividend vulnerable to a downturn in activity. We would be concerned about the risk of falling earnings. A useful secondary check may be to assess whether Treasury Wine Estates has generated enough free cash flow to pay its dividend. Fortunately, she has only paid out 45% of her free cash flow in the past year.
It is positive to see that the Treasury Wine Estates dividend is covered by both earnings and cash flow, as this is usually a sign that the dividend is sustainable, and a lower payout ratio usually suggests a higher payout ratio. large safety margin before the dividend is cut.
Click here to view the company’s payout ratio, as well as analysts’ estimates of its future dividends.
Have profits and dividends increased?
Companies with strong growth prospects generally make the best dividend payers because dividends are easier to grow when earnings per share improve. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold massively at the same time. With that in mind, we are encouraged by the steady growth of Treasury Wine Estates, with earnings per share up 7.4% on average over the past five years. While profits have grown at a credible rate, the company is paying the majority of its profits to its shareholders. It is therefore unlikely that the company will be able to reinvest heavily in its business, which could portend slower growth in the future.
Many investors will assess a company’s dividend yield by evaluating how much dividend payments have changed over time. Since our data began 10 years ago, Treasury Wine Estates has increased its dividend by around 17% per year on average. We are happy to see dividends increasing alongside earnings over multiple years, which may be a sign that the company intends to share the growth with its shareholders.
Is Treasury Wine Estates Worth Buying For Its Dividend? While earnings per share growth has been modest, dividend payouts from Treasury Wine Estates are around mid-range; without a sharp change in earnings, we think the dividend is probably quite sustainable. Fortunately, the company paid a conservatively small percentage of its free cash flow. Overall, it’s hard to get excited about Treasury Wine Estates from a dividend perspective.
On that note, you’ll want to research the risks that Treasury Wine Estates faces. Concrete example: we have spotted 1 warning sign for Treasury Wine Estates you must be aware.
A common investment mistake is to buy the first interesting stock you see. Here you will find a list of promising dividend paying stocks with a yield above 2% and an upcoming dividend.
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in any of the stocks mentioned.
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