Should You Buy EFG International AG (VTX:EFGN) For Its Upcoming 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 EFG International AG (VTX:EFGN) is about to go ex-dividend in just 3 days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. This means that investors who purchase EFG International's shares on or after the 26th of March will not receive the dividend, which will be paid on the 28th of March.

The company's next dividend payment will be CHF00.55 per share, and in the last 12 months, the company paid a total of CHF0.55 per share. Based on the last year's worth of payments, EFG International has a trailing yield of 4.6% on the current stock price of CHF011.92. If you buy this business for its dividend, you should have an idea of whether EFG International's dividend is reliable and sustainable. As a result, readers should always check whether EFG International has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for EFG International

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. EFG International paid out 59% of its earnings to investors last year, a normal payout level for most businesses.

When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

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 decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. It's encouraging to see EFG International has grown its earnings rapidly, up 31% a year for the past five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the past 10 years, EFG International has increased its dividend at approximately 11% a year on average. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

To Sum It Up

Should investors buy EFG International for the upcoming dividend? EFG International has an acceptable payout ratio and its earnings per share have been improving at a decent rate. In summary, EFG International appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

In light of that, while EFG International has an appealing dividend, it's worth knowing the risks involved with this stock. For example - EFG International has 1 warning sign we think you should be aware of.

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.