Why You Might Be Interested In Caixa Seguridade Participações S.A. (BVMF:CXSE3) For Its Upcoming Dividend

Readers hoping to buy Caixa Seguridade Participações S.A. (BVMF:CXSE3) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. 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. 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. Meaning, you will need to purchase Caixa Seguridade Participações' shares before the 29th of April to receive the dividend, which will be paid on the 8th of May.

The company's upcoming dividend is R$0.55 a share, following on from the last 12 months, when the company distributed a total of R$1.00 per share to shareholders. Based on the last year's worth of payments, Caixa Seguridade Participações stock has a trailing yield of around 6.4% on the current share price of R$15.62. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! 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 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. Its dividend payout ratio is 88% 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 worried about the risk of a drop in earnings.

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 consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. For this reason, we're glad to see Caixa Seguridade Participações's earnings per share have risen 19% per annum over the last five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, two years ago, Caixa Seguridade Participações has lifted its dividend by approximately 43% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

The Bottom Line

Has Caixa Seguridade Participações got what it takes to maintain its dividend payments? Caixa Seguridade Participações has an acceptable payout ratio and its earnings per share have been improving at a decent rate. In summary, Caixa Seguridade Participações appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

While it's tempting to invest in Caixa Seguridade Participações for the dividends alone, you should always be mindful of the risks involved. Every company has risks, and we've spotted 1 warning sign for Caixa Seguridade Participações you should know about.

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

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.