Three days left until OC Oerlikon Corporation AG (VTX:OERL) negotiates ex-dividend

Readers hoping to buy OC Oerlikon Corporation AG (VTX:OERL) for its dividend will have to make its way shortly, as the stock is set to trade ex-dividend. Typically, the ex-dividend date is one business day before the record date which is the date a company determines which shareholders are eligible to receive a dividend. The ex-dividend date is an important date to know because any purchase of shares made on or after this date may mean late settlement which does not appear on the record date. Thus, you can buy shares of OC Oerlikon before April 7 in order to collect the dividend that the company will pay on April 11.

The company’s next dividend payment will be CHF 0.35 per share. Last year, in total, the company distributed CHF 0.35 to shareholders. Looking at the last 12 months of distributions, OC Oerlikon has a rolling yield of around 4.7% on its current share price of CHF 7.45. We love to see companies pay out a dividend, but it’s also important to make sure that laying the golden eggs doesn’t kill our golden hen! Therefore, readers should always check whether OC Oerlikon was able to increase its dividend or if the dividend could be reduced.

Check out our latest analysis for OC Oerlikon

If a company pays out more dividends than it has earned, the dividend may become unsustainable – a less than ideal situation. OC Oerlikon pays an acceptable 72% of its profits, a level of payment common to most companies. Still, cash flow is usually more important than earnings in assessing the sustainability of dividends, so we always need to check whether the company has generated enough cash to pay its dividend. Dividends consumed 59% of the company’s free cash flow last year, which is within a normal range for most dividend-paying organizations.

It is encouraging to see that the dividend is covered by both earnings and cash flow. This generally suggests that the dividend is sustainable, as long as earnings don’t drop precipitously.

Click here to see the company’s payout ratio, as well as analysts’ estimates of its future dividends.

SWX:OERL Historic dividend April 3, 2022

Have earnings and dividends increased?

Companies with consistently rising earnings per share tend to create the best dividend-paying stocks because they generally find it easier to increase dividends per share. If earnings fall and the company is forced to cut its dividend, investors could see the value of their investment go up in smoke. We are therefore pleased to see that OC Oerlikon’s earnings per share have increased by 15% per year over the past five years. OC Oerlikon has an average payout ratio that suggests a balance between earnings growth and shareholder reward. Given the rapid growth rate of earnings per share and the current level of payout, there could be a possibility of further dividend increases in the future.

Many investors will gauge a company’s dividend yield by evaluating how much dividend payouts have changed over time. OC Oerlikon has achieved an average annual increase of 5.8% per year in its dividend, based on dividend payouts over the past 10 years. It’s good to see that earnings and the dividend have improved – although the former has grown much faster than the latter, perhaps because the company has reinvested more of its earnings into growth.

Last takeaway

Did OC Oerlikon get what it needed to maintain its dividend payments? Higher earnings per share generally result in higher dividends from long-term dividend-paying stocks. That’s why we’re happy to see OC Oerlikon’s earnings per share increasing, even though, as we’ve seen, the company pays out more than half of its earnings and cash flow – 72% and 59 % respectively. In summary, it’s hard to get excited about OC Oerlikon from a dividend perspective.

So, even though OC Oerlikon looks good from a dividend perspective, it’s still worth being aware of the risks associated with this stock. Example: we have identified 1 warning sign for OC Oerlikon you should be aware.

As a general rule, we don’t recommend simply buying the first dividend-paying stock you see. here is a curated list of attractive stocks that are strong dividend payers.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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