Should Income Investors Look At Administradora de Fondos de Pensiones Habitat S.A. (SNSE:HABITAT) Before Its Ex-Dividend?

It looks like Administradora de Fondos de Pensiones Habitat S.A. (SNSE:HABITAT) is about to go ex-dividend in the next couple of days. Typically, the ex-dividend date is two business days 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 important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Accordingly, Administradora de Fondos de Pensiones Habitat investors that purchase the stock on or after the 6th of October will not receive the dividend, which will be paid on the 10th of October.

The company's next dividend payment will be CL$20.00 per share, and in the last 12 months, the company paid a total of CL$110 per share. Based on the last year's worth of payments, Administradora de Fondos de Pensiones Habitat has a trailing yield of 8.5% on the current stock price of CL$1299.70. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. We need to see whether the dividend is covered by earnings and if it's growing.

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If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Administradora de Fondos de Pensiones Habitat is paying out an acceptable 58% of its profit, a common payout level among most companies.

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.

See our latest analysis for Administradora de Fondos de Pensiones Habitat

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

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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. This is why it's a relief to see Administradora de Fondos de Pensiones Habitat earnings per share are up 2.8% per annum 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. In the past 10 years, Administradora de Fondos de Pensiones Habitat has increased its dividend at approximately 7.2% 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.

To Sum It Up

Is Administradora de Fondos de Pensiones Habitat an attractive dividend stock, or better left on the shelf? Administradora de Fondos de Pensiones Habitat has been generating some growth in earnings per share while paying out more than half of its earnings to shareholders in the form of dividends. In sum this is a middling combination, and we find it hard to get excited about the company from a dividend perspective.

However if you're still interested in Administradora de Fondos de Pensiones Habitat as a potential investment, you should definitely consider some of the risks involved with Administradora de Fondos de Pensiones Habitat. For example, we've found 1 warning sign for Administradora de Fondos de Pensiones Habitat that we recommend you consider before investing in the business.

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.