Readers hoping to buy Bellevue Group AG (VTX:BBN) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. If you purchase the stock on or after the 25th of March, you won't be eligible to receive this dividend, when it is paid on the 29th of March.
Bellevue Group's next dividend payment will be CHF4.00 per share, and in the last 12 months, the company paid a total of CHF4.00 per share. Based on the last year's worth of payments, Bellevue Group has a trailing yield of 9.8% on the current stock price of CHF41. 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! As a result, readers should always check whether Bellevue Group has been able to grow its dividends, or if the dividend might be cut.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. It paid out 87% 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. It could become a concern if earnings started to decline.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings fall far enough, the company could be forced to cut its dividend. Fortunately for readers, Bellevue Group's earnings per share have been growing at 20% a year for the past five years.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Bellevue Group's dividend payments are effectively flat on where they were 10 years ago.
The Bottom Line
From a dividend perspective, should investors buy or avoid Bellevue Group? Earnings per share are growing at an attractive rate, and Bellevue Group is paying out a bit over half its profits. Bellevue Group 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.
While it's tempting to invest in Bellevue Group for the dividends alone, you should always be mindful of the risks involved. Case in point: We've spotted 3 warning signs for Bellevue Group you should be aware of.
If you're in the market for dividend stocks, we recommend checking our list of top 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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