Is It Smart To Buy LPS Brasil - Consultoria de Imóveis S.A. (BVMF:LPSB3) Before It Goes Ex-Dividend?

LPS Brasil - Consultoria de Imóveis S.A. (BVMF:LPSB3) stock is about to trade ex-dividend in 4 days. The ex-dividend date generally occurs two days before the record date, which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is important as the process of settlement involves at least two full business days. So if you miss that date, you would not show up on the company's books on the record date. Therefore, if you purchase LPS Brasil - Consultoria de Imóveis' shares on or after the 2nd of May, you won't be eligible to receive the dividend, when it is paid on the 1st of January.

The company's next dividend payment will be R$0.0728396 per share. Last year, in total, the company distributed R$0.041 to shareholders. Last year's total dividend payments show that LPS Brasil - Consultoria de Imóveis has a trailing yield of 2.9% on the current share price of R$1.40. If you buy this business for its dividend, you should have an idea of whether LPS Brasil - Consultoria de Imóveis's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

We've discovered 2 warning signs about LPS Brasil - Consultoria de Imóveis. View them for free.

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. LPS Brasil - Consultoria de Imóveis paid out a comfortable 46% of its profit last year. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. It paid out more than half (60%) of its free cash flow in the past year, which is within an average range for most companies.

It's positive to see that LPS Brasil - Consultoria de Imóveis's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

See our latest analysis for LPS Brasil - Consultoria de Imóveis

Click here to see how much of its profit LPS Brasil - Consultoria de Imóveis paid out over the last 12 months.

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. 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 comforting to see LPS Brasil - Consultoria de Imóveis's earnings have been skyrocketing, up 25% per annum for the past five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. LPS Brasil - Consultoria de Imóveis has seen its dividend decline 20% per annum on average over the past 10 years, which is not great to see. LPS Brasil - Consultoria de Imóveis is a rare case where dividends have been decreasing at the same time as earnings per share have been improving. It's unusual to see, and could point to unstable conditions in the core business, or more rarely an intensified focus on reinvesting profits.

To Sum It Up

Should investors buy LPS Brasil - Consultoria de Imóveis for the upcoming dividend? From a dividend perspective, we're encouraged to see that earnings per share have been growing, the company is paying out less than half of its earnings, and a bit over half its free cash flow. Overall we think this is an attractive combination and worthy of further research.

So while LPS Brasil - Consultoria de Imóveis looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. To help with this, we've discovered 2 warning signs for LPS Brasil - Consultoria de Imóveis 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.