Yahoo Finance Three Days Left Until Swisscom AG (VTX:SCMN) Trades Ex-Dividend
Readers hoping to buy Swisscom AG (VTX:SCMN) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. 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 Swisscom's shares on or after the 2nd of April will not receive the dividend, which will be paid on the 4th of April.
The company's upcoming dividend is CHF022.00 a share, following on from the last 12 months, when the company distributed a total of CHF22.00 per share to shareholders. Looking at the last 12 months of distributions, Swisscom has a trailing yield of approximately 4.0% on its current stock price of CHF0551.40. If you buy this business for its dividend, you should have an idea of whether Swisscom's dividend is reliable and sustainable. As a result, readers should always check whether Swisscom has been able to grow its dividends, or if the dividend might be cut.
See our latest analysis for Swisscom
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. Swisscom is paying out an acceptable 67% of its profit, a common payout level among most companies. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. It paid out more than half (65%) of its free cash flow in the past year, which is within an average range for most companies.
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. With that in mind, we're encouraged by the steady growth at Swisscom, with earnings per share up 2.3% on average over the last five years. Earnings growth has been slim and the company is paying out more than half of its earnings. While there is some room to both increase the payout ratio and reinvest in the business, generally the higher a payout ratio goes, the lower a company's prospects for future growth.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Swisscom's dividend payments are broadly unchanged compared to where they were 10 years ago.
Final Takeaway
Should investors buy Swisscom for the upcoming dividend? Earnings per share growth has been unremarkable, and while the company is paying out a majority of its earnings and cash flow in the form of dividends, the dividend payments don't appear excessive. All things considered, we are not particularly enthused about Swisscom from a dividend perspective.
So if you want to do more digging on Swisscom, you'll find it worthwhile knowing the risks that this stock faces. For example, we've found 2 warning signs for Swisscom (1 is significant!) that deserve your attention before investing in the shares.
Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.
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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.
