Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Wallenius Wilhelmsen ASA (OB:WALWIL) is about to trade ex-dividend in the next 2 days. You will need to purchase shares before the 12th of November to receive the dividend, which will be paid on the 1st of January.
Wallenius Wilhelmsen's next dividend payment will be kr0.06 per share. Last year, in total, the company distributed kr0.06 to shareholders. Based on the last year's worth of payments, Wallenius Wilhelmsen has a trailing yield of 2.4% on the current stock price of NOK23.1. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether Wallenius Wilhelmsen has been able to grow its dividends, or if the dividend might be cut.
Check out our latest analysis for Wallenius Wilhelmsen
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. Wallenius Wilhelmsen paid out a comfortable 31% of its profit last year. 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. What's good is that dividends were well covered by free cash flow, with the company paying out 5.2% of its cash flow last year.
It's positive to see that Wallenius Wilhelmsen'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 falling earnings are riskier for dividend shareholders. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Wallenius Wilhelmsen's earnings per share have plummeted approximately 31% a year over the previous five years.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Wallenius Wilhelmsen has seen its dividend decline 11% per annum on average over the past nine years, which is not great to see. While it's not great that earnings and dividends per share have fallen in recent years, we're encouraged by the fact that management has trimmed the dividend rather than risk over-committing the company in a risky attempt to maintain yields to shareholders.