Should You Buy Administradora de Fondos de Pensiones PlanVital S.A. (SNSE:PLANVITAL) For Its Upcoming Dividend?

It looks like Administradora de Fondos de Pensiones PlanVital S.A. (SNSE:PLANVITAL) is about to go ex-dividend in the next three days. Ex-dividend means that investors that purchase the stock on or after the 22nd of December will not receive this dividend, which will be paid on the 28th of December.

Administradora de Fondos de Pensiones PlanVital's next dividend payment will be CL$3.52 per share, on the back of last year when the company paid a total of CL$4.09 to shareholders. Based on the last year's worth of payments, Administradora de Fondos de Pensiones PlanVital stock has a trailing yield of around 6.9% on the current share price of CLP59. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to check whether the dividend payments are covered, and if earnings are growing.

Check out our latest analysis for Administradora de Fondos de Pensiones PlanVital

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. Administradora de Fondos de Pensiones PlanVital paid out a comfortable 43% of its profit last year.

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

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

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That's why it's comforting to see Administradora de Fondos de Pensiones PlanVital's earnings have been skyrocketing, up 27% per annum for the past five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, three years ago, Administradora de Fondos de Pensiones PlanVital has lifted its dividend by approximately 252% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

To Sum It Up

Should investors buy Administradora de Fondos de Pensiones PlanVital for the upcoming dividend? When companies are growing rapidly and retaining a majority of the profits within the business, it's usually a sign that reinvesting earnings creates more value than paying dividends to shareholders. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. In summary, Administradora de Fondos de Pensiones PlanVital appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

In light of that, while Administradora de Fondos de Pensiones PlanVital has an appealing dividend, it's worth knowing the risks involved with this stock. To help with this, we've discovered 1 warning sign for Administradora de Fondos de Pensiones PlanVital that you should be aware of before investing in their shares.

We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.

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This article by Simply Wall St is general in nature. 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.
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