Is It Smart To Buy Banestes S.A - Banco do Estado do Espírito Santo (BVMF:BEES3) Before It Goes Ex-Dividend?

Banestes S.A - Banco do Estado do Espírito Santo (BVMF:BEES3) stock is about to trade ex-dividend in four 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. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. This means that investors who purchase Banestes - Banco do Estado do Espírito Santo's shares on or after the 2nd of October will not receive the dividend, which will be paid on the 1st of November.

The company's next dividend payment will be R$0.019 per share. Last year, in total, the company distributed R$0.45 to shareholders. Based on the last year's worth of payments, Banestes - Banco do Estado do Espírito Santo stock has a trailing yield of around 5.2% on the current share price of R$8.65. 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 Banestes - Banco do Estado do Espírito Santo has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Banestes - Banco do Estado do Espírito Santo

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. Banestes - Banco do Estado do Espírito Santo paid out 55% 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.

Click here to see how much of its profit Banestes - Banco do Estado do Espírito Santo paid out over the last 12 months.

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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Fortunately for readers, Banestes - Banco do Estado do Espírito Santo's earnings per share have been growing at 13% a year for the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Banestes - Banco do Estado do Espírito Santo has delivered an average of 11% per year annual increase in its dividend, based on the past 10 years of dividend payments. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

To Sum It Up

Should investors buy Banestes - Banco do Estado do Espírito Santo for the upcoming dividend? Earnings per share are growing nicely, and Banestes - Banco do Estado do Espírito Santo is paying out a percentage of its earnings that is around the average for dividend-paying stocks. Banestes - Banco do Estado do Espírito Santo ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.

So while Banestes - Banco do Estado do Espírito Santo looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. In terms of investment risks, we've identified 1 warning sign with Banestes - Banco do Estado do Espírito Santo and understanding them should be part of your investment process.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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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.