Multiplan Empreendimentos Imobiliários S.A. (BVMF:MULT3) Passed Our Checks, And It's About To Pay A R$0.39 Dividend

Readers hoping to buy Multiplan Empreendimentos Imobiliários S.A. (BVMF:MULT3) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. This means that investors who purchase shares on or after the 29th of December will not receive the dividend, which will be paid on the 30th of December.

Multiplan Empreendimentos Imobiliários's next dividend payment will be R$0.39 per share, on the back of last year when the company paid a total of R$0.47 to shareholders. Calculating the last year's worth of payments shows that Multiplan Empreendimentos Imobiliários has a trailing yield of 2.0% on the current share price of R$23.74. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. 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 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. Multiplan Empreendimentos Imobiliários is paying out just 9.4% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Luckily it paid out just 15% of its free cash flow last year.

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?

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. For this reason, we're glad to see Multiplan Empreendimentos Imobiliários's earnings per share have risen 20% per annum over the last five years. The company has managed to grow earnings at a rapid rate, while reinvesting most of the profits within the business. This will make it easier to fund future growth efforts and we think this is an attractive combination - plus the dividend can always be increased later.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last 10 years, Multiplan Empreendimentos Imobiliários has lifted its dividend by approximately 15% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

The Bottom Line

Is Multiplan Empreendimentos Imobiliários worth buying for its dividend? Multiplan Empreendimentos Imobiliários has grown its earnings per share while simultaneously reinvesting in the business. Unfortunately it's cut the dividend at least once in the past 10 years, but the conservative payout ratio makes the current dividend look sustainable. Multiplan Empreendimentos Imobiliários looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

On that note, you'll want to research what risks Multiplan Empreendimentos Imobiliários is facing. To help with this, we've discovered 3 warning signs for Multiplan Empreendimentos Imobiliários (1 is potentially serious!) that you ought to be aware of before buying the shares.

We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.

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This article by Simply Wall St is general in nature. 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.
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