It Might Not Be A Great Idea To Buy Banco Latinoamericano de Comercio Exterior, S.A (NYSE:BLX) For Its Next Dividend
It looks like Banco Latinoamericano de Comercio Exterior, S.A (NYSE:BLX) is about to go ex-dividend in the next 4 days. You can purchase shares before the 14th of May in order to receive the dividend, which the company will pay on the 2nd of June.
Banco Latinoamericano de Comercio Exterior's next dividend payment will be US$0.25 per share, on the back of last year when the company paid a total of US$1.00 to shareholders. Based on the last year's worth of payments, Banco Latinoamericano de Comercio Exterior stock has a trailing yield of around 6.2% on the current share price of $16.15. If you buy this business for its dividend, you should have an idea of whether Banco Latinoamericano de Comercio Exterior's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
Check out our latest analysis for Banco Latinoamericano de Comercio Exterior
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. Banco Latinoamericano de Comercio Exterior paid out 68% of its earnings to investors last year, a normal payout level for most businesses.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
Have Earnings And Dividends Been Growing?
When earnings decline, dividend companies become much harder to analyse and own safely. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Banco Latinoamericano de Comercio Exterior's earnings per share have fallen at approximately 11% a year over the previous five years. When earnings per share fall, the maximum amount of dividends that can be paid also falls.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Banco Latinoamericano de Comercio Exterior has delivered 5.2% dividend growth per year on average over the past 10 years. Growing the dividend payout ratio while earnings are declining can deliver nice returns for a while, but it's always worth checking for when the company can't increase the payout ratio any more - because then the music stops.
Final Takeaway
From a dividend perspective, should investors buy or avoid Banco Latinoamericano de Comercio Exterior? We're not overly enthused to see Banco Latinoamericano de Comercio Exterior's earnings in retreat at the same time as the company is paying out more than half of its earnings as dividends to shareholders. This is not an overtly appealing combination of characteristics, and we're just not that interested in this company's dividend.
With that being said, if you're still considering Banco Latinoamericano de Comercio Exterior as an investment, you'll find it beneficial to know what risks this stock is facing. For instance, we've identified 2 warning signs for Banco Latinoamericano de Comercio Exterior (1 doesn't sit too well with us) you should be aware of.
We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
This article by Simply Wall St is general in nature. 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.
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