Only Four Days Left To Cash In On Administradora de Fondos de Pensiones Capital's (SNSE:AFPCAPITAL) Dividend

By
Simply Wall St
Published
May 18, 2021
SNSE:AFPCAPITAL
Source: Shutterstock

Administradora de Fondos de Pensiones Capital S.A. (SNSE:AFPCAPITAL) stock is about to trade ex-dividend in four days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. This means that investors who purchase Administradora de Fondos de Pensiones Capital's shares on or after the 24th of May will not receive the dividend, which will be paid on the 28th of May.

The company's next dividend payment will be CL$5.75 per share, and in the last 12 months, the company paid a total of CL$27.22 per share. Based on the last year's worth of payments, Administradora de Fondos de Pensiones Capital stock has a trailing yield of around 2.3% on the current share price of CLP250. If you buy this business for its dividend, you should have an idea of whether Administradora de Fondos de Pensiones Capital's dividend is reliable and sustainable. As a result, readers should always check whether Administradora de Fondos de Pensiones Capital has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Administradora de Fondos de Pensiones Capital

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Last year Administradora de Fondos de Pensiones Capital paid out 97% of its profits as dividends to shareholders, suggesting the dividend is not well covered by earnings.

When the dividend payout ratio is high, as it is in this case, the dividend is usually at greater risk of being cut in the future.

Click here to see how much of its profit Administradora de Fondos de Pensiones Capital paid out over the last 12 months.

historic-dividend
SNSE:AFPCAPITAL Historic Dividend May 19th 2021

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 Administradora de Fondos de Pensiones Capital, with earnings per share up 8.2% on average over the last five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Administradora de Fondos de Pensiones Capital's dividend payments per share have declined at 5.0% per year on average over the past 10 years, which is uninspiring. Administradora de Fondos de Pensiones Capital is a rare case where dividends have been decreasing at the same time as earnings per share have been improving. It's unusual to see, and could point to unstable conditions in the core business, or more rarely an intensified focus on reinvesting profits.

The Bottom Line

Is Administradora de Fondos de Pensiones Capital an attractive dividend stock, or better left on the shelf? While we like that its earnings are growing somewhat, we're not enamored that it's paying out 97% of last year's earnings. This is not an overtly appealing combination of characteristics, and we're just not that interested in this company's dividend.

Having said that, if you're looking at this stock without much concern for the dividend, you should still be familiar of the risks involved with Administradora de Fondos de Pensiones Capital. To help with this, we've discovered 1 warning sign for Administradora de Fondos de Pensiones Capital that you should be aware of before investing in their shares.

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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