MAHLE Metal Leve S.A. (BVMF:LEVE3) Will Pay A R$5.54 Dividend In Four Days

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that MAHLE Metal Leve S.A. (BVMF:LEVE3) is about to go ex-dividend in just 4 days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. 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. Therefore, if you purchase MAHLE Metal Leve's shares on or after the 3rd of November, you won't be eligible to receive the dividend, when it is paid on the 10th of November.

The upcoming dividend for MAHLE Metal Leve is R$5.54 per share, increased from last year's total dividends per share of R$2.99. If you buy this business for its dividend, you should have an idea of whether MAHLE Metal Leve's dividend is reliable and sustainable. As a result, readers should always check whether MAHLE Metal Leve has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for MAHLE Metal Leve

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. MAHLE Metal Leve paid out 54% of its earnings to investors last year, a normal payout level for most businesses. A useful secondary check can be to evaluate whether MAHLE Metal Leve generated enough free cash flow to afford its dividend. It paid out more than half (63%) of its free cash flow in the past year, which is within an average range for most companies.

It's positive to see that MAHLE Metal Leve'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 how much of its profit MAHLE Metal Leve paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's encouraging to see MAHLE Metal Leve has grown its earnings rapidly, up 24% a year for the past five years. The current payout ratio suggests a good balance between rewarding shareholders with dividends, and reinvesting in growth. Earnings per share have been growing quickly and in combination with some reinvestment and a middling payout ratio, the stock may have decent dividend prospects going forwards.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last 10 years, MAHLE Metal Leve has lifted its dividend by approximately 8.2% 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.

The Bottom Line

Is MAHLE Metal Leve an attractive dividend stock, or better left on the shelf? It's good to see earnings are growing, since all of the best dividend stocks grow their earnings meaningfully over the long run. That's why we're glad to see MAHLE Metal Leve's earnings per share growing, although as we saw, the company is paying out more than half of its earnings and cashflow - 54% and 63% respectively. Overall, it's hard to get excited about MAHLE Metal Leve from a dividend perspective.

On that note, you'll want to research what risks MAHLE Metal Leve is facing. Our analysis shows 3 warning signs for MAHLE Metal Leve that we strongly recommend you have a look at before investing in the company.

If you're in the market for strong dividend payers, we recommend checking our selection of top 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.