Is It Smart To Buy Multiplan Empreendimentos Imobiliários S.A. (BVMF:MULT3) Before It Goes Ex-Dividend?

Multiplan Empreendimentos Imobiliários S.A. (BVMF:MULT3) is about to trade ex-dividend in the next couple of days. 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 important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Thus, you can purchase Multiplan Empreendimentos Imobiliários' shares before the 27th of June in order to receive the dividend, which the company will pay on the 30th of June.

The company's next dividend payment will be R$0.21 per share. Last year, in total, the company distributed R$0.50 to shareholders. Calculating the last year's worth of payments shows that Multiplan Empreendimentos Imobiliários has a trailing yield of 2.2% on the current share price of R$22.51. 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! We need to see whether the dividend is covered by earnings and if it's growing.

See our latest analysis for Multiplan Empreendimentos Imobiliários

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. Multiplan Empreendimentos Imobiliários is paying out an acceptable 51% of its profit, a common payout level among most companies. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. It distributed 26% of its free cash flow as dividends, a comfortable payout level for most companies.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

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 earnings fall far enough, the company could be forced to cut its dividend. For this reason, we're glad to see Multiplan Empreendimentos Imobiliários's earnings per share have risen 12% per annum over the last five years. Multiplan Empreendimentos Imobiliários is paying out a bit over half its earnings, which suggests the company is striking a balance between reinvesting in growth, and paying dividends. This is a reasonable combination that could hint at some further dividend increases in the future.

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, 10 years ago, Multiplan Empreendimentos Imobiliários has lifted its dividend by approximately 6.0% a year on average. Earnings per share have been growing much quicker than dividends, potentially because Multiplan Empreendimentos Imobiliários is keeping back more of its profits to grow the business.

The Bottom Line

Is Multiplan Empreendimentos Imobiliários an attractive dividend stock, or better left on the shelf? 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, we've found 3 warning signs for Multiplan Empreendimentos Imobiliários that we recommend you consider before investing in the business.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield 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.