Intertrust N.V. (AMS:INTER) is about to trade ex-dividend in the next 4 days. Investors can purchase shares before the 6th of November in order to be eligible for this dividend, which will be paid on the 29th of November.
Intertrust's next dividend payment will be €0.3 per share, on the back of last year when the company paid a total of €0.6 to shareholders. Last year's total dividend payments show that Intertrust has a trailing yield of 3.6% on the current share price of €17.04. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! As a result, readers should always check whether Intertrust has been able to grow its dividends, or if the dividend might be cut.
View our latest analysis for Intertrust
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Intertrust is paying out an acceptable 56% of its profit, a common payout level among most companies. A useful secondary check can be to evaluate whether Intertrust generated enough free cash flow to afford its dividend. It distributed 33% of its free cash flow as dividends, a comfortable payout level 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?
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 Intertrust's earnings have been skyrocketing, up 108% per annum for the past five years. Management appears to be striking a nice balance between reinvesting for growth and paying dividends to shareholders. With a reasonable payout ratio, profits being reinvested, and some earnings growth, Intertrust could have strong prospects for future increases to the dividend.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the past three years, Intertrust has increased its dividend at approximately 8.9% a year on average. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.