Coca-Cola Europacific Partners PLC (AMS:CCEP) stock is about to trade ex-dividend in 4 days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Accordingly, Coca-Cola Europacific Partners investors that purchase the stock on or after the 14th of November will not receive the dividend, which will be paid on the 3rd of December.

The company's next dividend payment will be €1.23 per share. Last year, in total, the company distributed €1.91 to shareholders. Based on the last year's worth of payments, Coca-Cola Europacific Partners stock has a trailing yield of around 2.6% on the current share price of €72.70. 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 Coca-Cola Europacific Partners has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Coca-Cola Europacific Partners

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Coca-Cola Europacific Partners paid out 55% of its earnings to investors last year, a normal payout level for most businesses. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. It paid out more than half (52%) 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?

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 earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. For this reason, we're glad to see Coca-Cola Europacific Partners's earnings per share have risen 13% per annum over the last five years. Coca-Cola Europacific Partners has an average payout ratio which suggests a balance between growing earnings and rewarding shareholders. This is a reasonable combination that could hint at some further dividend increases in the future.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Coca-Cola Europacific Partners has delivered an average of 14% per year annual increase in its dividend, based on the past eight years of dividend payments. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

The Bottom Line

Is Coca-Cola Europacific Partners worth buying for its dividend? It's good to see earnings are growing, since all of the best dividend stocks grow their earnings meaningfully over the long run. However, we'd also note that Coca-Cola Europacific Partners is paying out more than half of its earnings and cash flow as profits, which could limit the dividend growth if earnings growth slows. In summary, while it has some positive characteristics, we're not inclined to race out and buy Coca-Cola Europacific Partners today.

While it's tempting to invest in Coca-Cola Europacific Partners for the dividends alone, you should always be mindful of the risks involved. Case in point: We've spotted 3 warning signs for Coca-Cola Europacific Partners you should be aware of.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.

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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.