Here's What We Like About Brookfield Asset Management's (TSE:BAM) Upcoming Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Brookfield Asset Management Ltd. (TSE:BAM) is about to trade ex-dividend in the next four 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 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. Therefore, if you purchase Brookfield Asset Management's shares on or after the 29th of August, you won't be eligible to receive the dividend, when it is paid on the 29th of September.

The company's upcoming dividend is US$0.4375 a share, following on from the last 12 months, when the company distributed a total of US$1.75 per share to shareholders. Based on the last year's worth of payments, Brookfield Asset Management has a trailing yield of 2.9% on the current stock price of CA$84.47. If you buy this business for its dividend, you should have an idea of whether Brookfield Asset Management's dividend is reliable and sustainable. As a result, readers should always check whether Brookfield Asset Management has been able to grow its dividends, or if the dividend might be cut.

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

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. Brookfield Asset Management paid out 59% of its earnings to investors last year, a normal payout level for most businesses.

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.

See our latest analysis for Brookfield Asset Management

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. That's why we're optimistic about Brookfield Asset Management's earnings, which have ripped higher, up 43% over the past year. While we'd be remiss not to point out that a year is a very short time in dividend investing, it's an encouraging sign so far.

One year is a very short time frame in the pantheon of investing, so we wouldn't get too hung up on these numbers.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Brookfield Asset Management has delivered an average of 11% per year annual increase in its dividend, based on the past three years of dividend payments. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

The Bottom Line

Should investors buy Brookfield Asset Management for the upcoming dividend? Brookfield Asset Management has an acceptable payout ratio and its earnings per share have been improving at a decent rate. Brookfield Asset Management ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.

So while Brookfield Asset Management looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. In terms of investment risks, we've identified 2 warning signs with Brookfield Asset Management and understanding them should be part of your investment process.

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.