Income Investors Should Know That Administradora Americana de Inversiones S.A. (SNSE:AAISA) Goes Ex-Dividend Soon

Administradora Americana de Inversiones S.A. (SNSE:AAISA) stock is about to trade ex-dividend in 4 days. The ex-dividend date is two business days before a company's record date in most cases, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. In other words, investors can purchase Administradora Americana de Inversiones' shares before the 12th of May in order to be eligible for the dividend, which will be paid on the 16th of May.

The company's next dividend payment will be CL$11.50 per share, on the back of last year when the company paid a total of CL$10.00 to shareholders. Based on the last year's worth of payments, Administradora Americana de Inversiones stock has a trailing yield of around 4.3% on the current share price of CL$233.96. 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 Administradora Americana de Inversiones can afford its dividend, and if the dividend could grow.

This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality.

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Administradora Americana de Inversiones paid out just 21% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

Check out our latest analysis for Administradora Americana de Inversiones

Click here to see how much of its profit Administradora Americana de Inversiones paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. So we're not too excited that Administradora Americana de Inversiones's earnings are down 4.4% a year over the past three years.

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, three years ago, Administradora Americana de Inversiones has lifted its dividend by approximately 42% a year on average.

The Bottom Line

Should investors buy Administradora Americana de Inversiones for the upcoming dividend? Earnings per share have shrunk noticeably in recent years, although we like that the company has a low payout ratio. This could suggest a cut to the dividend may not be a major risk in the near future. It doesn't appear an outstanding opportunity, but could be worth a closer look.

With that being said, if dividends aren't your biggest concern with Administradora Americana de Inversiones, you should know about the other risks facing this business. To help with this, we've discovered 1 warning sign for Administradora Americana de Inversiones that you should be aware of before investing in their shares.

If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.