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

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

Administradora de Fondos de Pensiones ProVida S.A. (SNSE:PROVIDA) stock is about to trade ex-dividend in 4 days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the 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, Administradora de Fondos de Pensiones ProVida investors that purchase the stock on or after the 24th of May will not receive the dividend, which will be paid on the 27th of May.

The company's upcoming dividend is CL$72.80 a share, following on from the last 12 months, when the company distributed a total of CL$107 per share to shareholders. Based on the last year's worth of payments, Administradora de Fondos de Pensiones ProVida has a trailing yield of 6.5% on the current stock price of CLP1649. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

View our latest analysis for Administradora de Fondos de Pensiones ProVida

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Administradora de Fondos de Pensiones ProVida paid out a comfortable 33% 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 Administradora de Fondos de Pensiones ProVida paid out over the last 12 months.

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

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Readers will understand then, why we're concerned to see Administradora de Fondos de Pensiones ProVida's earnings per share have dropped 17% a year over the past five years. Ultimately, when earnings per share decline, the size of the pie from which dividends can be paid, shrinks.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Administradora de Fondos de Pensiones ProVida has seen its dividend decline 5.3% per annum on average over the past 10 years, which is not great to see. It's never nice to see earnings and dividends falling, but at least management has cut the dividend rather than potentially risk the company's health in an attempt to maintain it.

Final Takeaway

Is Administradora de Fondos de Pensiones ProVida an attractive dividend stock, or better left on the shelf? 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. In sum this is a middling combination, and we find it hard to get excited about the company from a dividend perspective.

So if you want to do more digging on Administradora de Fondos de Pensiones ProVida, you'll find it worthwhile knowing the risks that this stock faces. To that end, you should learn about the 2 warning signs we've spotted with Administradora de Fondos de Pensiones ProVida (including 1 which is a bit unpleasant).

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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