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Surgutneftegas Public Joint Stock Company (MCX:SNGS) is about to trade ex-dividend in the next 3 days. You will need to purchase shares before the 17th of July to receive the dividend, which will be paid on the 1st of January.
Surgutneftegas's next dividend payment will be RUруб0.65 per share, on the back of last year when the company paid a total of RUруб0.65 to shareholders. Based on the last year's worth of payments, Surgutneftegas stock has a trailing yield of around 2.4% on the current share price of RUB26.79. 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! So we need to investigate whether Surgutneftegas can afford its dividend, and if the dividend could grow.
See our latest analysis for Surgutneftegas
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Surgutneftegas paid out just 2.9% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. 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. Luckily it paid out just 17% of its free cash flow last year.
It's positive to see that Surgutneftegas's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.
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. It's encouraging to see Surgutneftegas has grown its earnings rapidly, up 25% a year for the past five years.
Surgutneftegas 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.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Surgutneftegas has delivered 0.9% dividend growth per year on average over the past 9 years. Earnings per share have been growing much quicker than dividends, potentially because Surgutneftegas is keeping back more of its profits to grow the business.