Banco do Brasil S.A. (BVMF:BBAS3) Is About To Go Ex-Dividend, And It Pays A 4.8% Yield

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Banco do Brasil S.A. (BVMF:BBAS3) is about to trade ex-dividend in the next four days. Ex-dividend means that investors that purchase the stock on or after the 12th of March will not receive this dividend, which will be paid on the 31st of March.

Banco do Brasil's next dividend payment will be R$0.15 per share, on the back of last year when the company paid a total of R$1.47 to shareholders. Last year's total dividend payments show that Banco do Brasil has a trailing yield of 4.8% on the current share price of R$30.6. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. 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 do Brasil

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Banco do Brasil paid out a comfortable 34% of its profit last year.

Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.

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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That's why it's not ideal to see Banco do Brasil's earnings per share have been shrinking at 2.8% a year over the previous five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Banco do Brasil's dividend payments per share have declined at 1.6% per year on average over the past 10 years, which is uninspiring.

To Sum It Up

From a dividend perspective, should investors buy or avoid Banco do Brasil? Banco do Brasil's earnings per share are down over the past five years, although it has the cushion of a low payout ratio, which would suggest a cut to the dividend is relatively unlikely. In sum this is a middling combination, and we find it hard to get excited about the company from a dividend perspective.

So if you want to do more digging on Banco do Brasil, you'll find it worthwhile knowing the risks that this stock faces. For example, we've found 3 warning signs for Banco do Brasil that we recommend you consider before investing in the business.

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.

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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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