Stock Analysis

There's A Lot To Like About Echeverría Izquierdo's (SNSE:EISA) Upcoming CL$3.79 Dividend

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SNSE:EISA
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Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Echeverría Izquierdo S.A. (SNSE:EISA) is about to trade ex-dividend in the next 3 days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Meaning, you will need to purchase Echeverría Izquierdo's shares before the 11th of December to receive the dividend, which will be paid on the 14th of December.

The company's next dividend payment will be CL$3.79 per share, and in the last 12 months, the company paid a total of CL$5.68 per share. Based on the last year's worth of payments, Echeverría Izquierdo stock has a trailing yield of around 4.1% on the current share price of CLP139.05. 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 Echeverría Izquierdo can afford its dividend, and if the dividend could grow.

View our latest analysis for Echeverría Izquierdo

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Echeverría Izquierdo has a low and conservative payout ratio of just 20% of its income after tax.

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

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SNSE:EISA Historic Dividend December 7th 2023

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 it's comforting to see Echeverría Izquierdo's earnings have been skyrocketing, up 77% per annum for the past five years. Echeverría Izquierdo earnings per share have been sprinting ahead like the Road Runner at a track and field day; scarcely stopping even for a cheeky "beep-beep". We also like that it is reinvesting most of its profits in its business.'

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Since the start of our data, 10 years ago, Echeverría Izquierdo has lifted its dividend by approximately 2.4% a year on average. It's good to see both earnings and the dividend have improved - although the former has been rising much quicker than the latter, possibly due to the company reinvesting more of its profits in growth.

The Bottom Line

Is Echeverría Izquierdo an attractive dividend stock, or better left on the shelf? Companies like Echeverría Izquierdo that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. This strategy can add significant value to shareholders over the long term - as long as it's done without issuing too many new shares. In summary, Echeverría Izquierdo appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

In light of that, while Echeverría Izquierdo has an appealing dividend, it's worth knowing the risks involved with this stock. For example, we've found 4 warning signs for Echeverría Izquierdo (1 can't be ignored!) that deserve your attention before investing in the shares.

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.

Valuation is complex, but we're helping make it simple.

Find out whether Echeverría Izquierdo is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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