Caixa Seguridade Participações (BVMF:CXSE3) Could Be A Buy For Its Upcoming Dividend

It looks like Caixa Seguridade Participações S.A. (BVMF:CXSE3) is about to go ex-dividend in the next 4 days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. In other words, investors can purchase Caixa Seguridade Participações' shares before the 2nd of August in order to be eligible for the dividend, which will be paid on the 15th of August.

The company's next dividend payment will be R$0.28 per share, on the back of last year when the company paid a total of R$1.00 to shareholders. Looking at the last 12 months of distributions, Caixa Seguridade Participações has a trailing yield of approximately 6.9% on its current stock price of R$14.43. If you buy this business for its dividend, you should have an idea of whether Caixa Seguridade Participações's dividend is reliable and sustainable. So we need to investigate whether Caixa Seguridade Participações can afford its dividend, and if the dividend could grow.

See our latest analysis for Caixa Seguridade Participações

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. Its dividend payout ratio is 87% of profit, which means the company is paying out a majority of its earnings. The relatively limited profit reinvestment could slow the rate of future earnings growth. We'd be concerned if earnings began to decline.

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?

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. For this reason, we're glad to see Caixa Seguridade Participações's earnings per share have risen 20% per annum over the last five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Since the start of our data, three years ago, Caixa Seguridade Participações has lifted its dividend by approximately 27% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

To Sum It Up

Is Caixa Seguridade Participações worth buying for its dividend? Earnings per share are growing nicely, and Caixa Seguridade Participações is paying out a percentage of its earnings that is around the average for dividend-paying stocks. Caixa Seguridade Participações 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.

In light of that, while Caixa Seguridade Participações has an appealing dividend, it's worth knowing the risks involved with this stock. To help with this, we've discovered 1 warning sign for Caixa Seguridade Participações that you should be aware of before investing in their shares.

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.

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