Why You Might Be Interested In Inversiones La Construcción S.A. (SNSE:ILC) For Its Upcoming Dividend

By
Simply Wall St
Published
May 07, 2022
SNSE:ILC
Source: Shutterstock

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Inversiones La Construcción S.A. (SNSE:ILC) is about to go ex-dividend in just 4 days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order 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. Accordingly, Inversiones La Construcción investors that purchase the stock on or after the 12th of May will not receive the dividend, which will be paid on the 17th of May.

The company's next dividend payment will be CL$250 per share. Last year, in total, the company distributed CL$310 to shareholders. Based on the last year's worth of payments, Inversiones La Construcción stock has a trailing yield of around 9.0% on the current share price of CLP3448.8. If you buy this business for its dividend, you should have an idea of whether Inversiones La Construcción's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

View our latest analysis for Inversiones La Construcción

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. Inversiones La Construcción paid out a comfortable 35% of its profit last year.

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.

Click here to see how much of its profit Inversiones La Construcción paid out over the last 12 months.

historic-dividend
SNSE:ILC Historic Dividend May 7th 2022

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. If earnings fall far enough, the company could be forced to cut its dividend. This is why it's a relief to see Inversiones La Construcción earnings per share are up 6.2% per annum over the last five years.

We'd also point out that Inversiones La Construcción issued a meaningful number of new shares in the past year. Trying to grow the dividend while issuing large amounts of new shares reminds us of the ancient Greek tale of Sisyphus - perpetually pushing a boulder uphill.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Inversiones La Construcción has seen its dividend decline 1.5% per annum on average over the past 10 years, which is not great to see.

To Sum It Up

Should investors buy Inversiones La Construcción for the upcoming dividend? Inversiones La Construcción 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. Inversiones La Construcción ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.

So while Inversiones La Construcción looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. For example, we've found 3 warning signs for Inversiones La Construcción (2 are significant!) that deserve your attention before investing in the shares.

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

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