Be Sure To Check Out Multiplan Empreendimentos Imobiliários S.A. (BVMF:MULT3) Before It Goes Ex-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 Multiplan Empreendimentos Imobiliários S.A. (BVMF:MULT3) is about to go ex-dividend in just 2 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. Meaning, you will need to purchase Multiplan Empreendimentos Imobiliários' shares before the 28th of December to receive the dividend, which will be paid on the 31st of December.

The company's next dividend payment will be R$0.16 per share. Last year, in total, the company distributed R$0.99 to shareholders. Calculating the last year's worth of payments shows that Multiplan Empreendimentos Imobiliários has a trailing yield of 3.5% on the current share price of R$28.58. If you buy this business for its dividend, you should have an idea of whether Multiplan Empreendimentos Imobiliários's dividend is reliable and sustainable. So we need to investigate whether Multiplan Empreendimentos Imobiliários can afford its dividend, and if the dividend could grow.

See our latest analysis for Multiplan Empreendimentos Imobiliários

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. It paid out 78% of its earnings as dividends last year, which is not unreasonable, but limits reinvestment in the business and leaves the dividend vulnerable to a business downturn. We'd be worried about the risk of a drop in earnings. A useful secondary check can be to evaluate whether Multiplan Empreendimentos Imobiliários generated enough free cash flow to afford its dividend. It distributed 41% of its free cash flow as dividends, a comfortable payout level for most companies.

It's positive to see that Multiplan Empreendimentos Imobiliários'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.

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. It's encouraging to see Multiplan Empreendimentos Imobiliários has grown its earnings rapidly, up 21% a year for the past five years. Earnings per share are growing at a rapid rate, yet the company is paying out more than three-quarters of its earnings.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Multiplan Empreendimentos Imobiliários has delivered an average of 11% per year annual increase in its dividend, based on the past 10 years of dividend payments. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

Final Takeaway

Has Multiplan Empreendimentos Imobiliários got what it takes to maintain its dividend payments? Multiplan Empreendimentos Imobiliários's growing earnings per share and conservative payout ratios make for a decent combination. We also like that it paid out a lower percentage of its cash flow. There's a lot to like about Multiplan Empreendimentos Imobiliários, and we would prioritise taking a closer look at it.

While it's tempting to invest in Multiplan Empreendimentos Imobiliários for the dividends alone, you should always be mindful of the risks involved. For example - Multiplan Empreendimentos Imobiliários has 2 warning signs we think 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.