Here's Why We're Wary Of Buying Wiz Co Participações e Corretagem de Seguros' (BVMF:WIZC3) For Its Upcoming Dividend

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 Wiz Co Participações e Corretagem de Seguros S.A. (BVMF:WIZC3) is about to go ex-dividend in just 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 important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Meaning, you will need to purchase Wiz Co Participações e Corretagem de Seguros' shares before the 30th of April to receive the dividend, which will be paid on the 12th of December.

The company's next dividend payment will be R$0.2462439 per share, on the back of last year when the company paid a total of R$0.45 to shareholders. Based on the last year's worth of payments, Wiz Co Participações e Corretagem de Seguros stock has a trailing yield of around 6.0% on the current share price of R$7.42. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether Wiz Co Participações e Corretagem de Seguros can afford its dividend, and if the dividend could grow.

View our latest analysis for Wiz Co Participações e Corretagem de Seguros

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Wiz Co Participações e Corretagem de Seguros is paying out an acceptable 73% of its profit, a common payout level among most companies.

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 shrinking earnings are tricky from a dividend perspective. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That's why it's not ideal to see Wiz Co Participações e Corretagem de Seguros's earnings per share have been shrinking at 4.4% a year over the previous five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Wiz Co Participações e Corretagem de Seguros's dividend payments per share have declined at 17% per year on average over the past five years, which is uninspiring. It's never nice to see earnings and dividends falling, but at least management has cut the dividend rather than potentially risk the company's health in an attempt to maintain it.

Final Takeaway

Is Wiz Co Participações e Corretagem de Seguros worth buying for its dividend? We're not overly enthused to see Wiz Co Participações e Corretagem de Seguros's earnings in retreat at the same time as the company is paying out more than half of its earnings as dividends to shareholders. All things considered, we're not optimistic about its dividend prospects, and would be inclined to leave it on the shelf for now.

Having said that, if you're looking at this stock without much concern for the dividend, you should still be familiar of the risks involved with Wiz Co Participações e Corretagem de Seguros. Case in point: We've spotted 1 warning sign for Wiz Co Participações e Corretagem de Seguros you should be aware of.

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.