Scotiabank Chile (SNSE:SCOTIABKCL) Could Be A Buy For Its Upcoming Dividend

Readers hoping to buy Scotiabank Chile S.A. (SNSE:SCOTIABKCL) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is usually set to be two business days before the record date, which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is important as the process of settlement involves at least two full business days. So if you miss that date, you would not show up on the company's books on the record date. Thus, you can purchase Scotiabank Chile's shares before the 17th of April in order to receive the dividend, which the company will pay on the 24th of April.

The company's next dividend payment will be CL$17.67856 per share, and in the last 12 months, the company paid a total of CL$10.00 per share. Looking at the last 12 months of distributions, Scotiabank Chile has a trailing yield of approximately 4.3% on its current stock price of CL$230.00. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether Scotiabank Chile can afford its dividend, and if the dividend could grow.

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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. Scotiabank Chile paid out a comfortable 27% of its profit last year.

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.

Check out our latest analysis for Scotiabank Chile

Click here to see how much of its profit Scotiabank Chile paid out over the last 12 months.

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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we're encouraged by the steady growth at Scotiabank Chile, with earnings per share up 9.9% on average over the last five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last 10 years, Scotiabank Chile has lifted its dividend by approximately 10% a year on average. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

The Bottom Line

Has Scotiabank Chile got what it takes to maintain its dividend payments? Scotiabank Chile has seen its earnings per share grow slowly in recent years, and the company reinvests more than half of its profits in the business, which generally bodes well for its future prospects. In summary, Scotiabank Chile appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

While it's tempting to invest in Scotiabank Chile for the dividends alone, you should always be mindful of the risks involved. In terms of investment risks, we've identified 1 warning sign with Scotiabank Chile 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.