Línea Directa Aseguradora, S.A., Compañía de Seguros y Reaseguros (BME:LDA) Stock Goes Ex-Dividend In Just Three Days

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 Línea Directa Aseguradora, S.A., Compañía de Seguros y Reaseguros (BME:LDA) is about to go ex-dividend in just three days. The ex-dividend date is usually set to be two business days 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 an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Therefore, if you purchase Línea Directa Aseguradora Compañía de Seguros y Reaseguros' shares on or after the 20th of April, you won't be eligible to receive the dividend, when it is paid on the 22nd of April.

The company's upcoming dividend is €0.0111707 a share, following on from the last 12 months, when the company distributed a total of €0.041 per share to shareholders. Looking at the last 12 months of distributions, Línea Directa Aseguradora Compañía de Seguros y Reaseguros has a trailing yield of approximately 2.2% on its current stock price of €1.274. If you buy this business for its dividend, you should have an idea of whether Línea Directa Aseguradora Compañía de Seguros y Reaseguros's dividend is reliable and sustainable. As a result, readers should always check whether Línea Directa Aseguradora Compañía de Seguros y Reaseguros has been able to grow its dividends, or if the dividend might be cut.

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Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Línea Directa Aseguradora Compañía de Seguros y Reaseguros 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.

See our latest analysis for Línea Directa Aseguradora Compañía de Seguros y Reaseguros

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. With that in mind, we're discomforted by Línea Directa Aseguradora Compañía de Seguros y Reaseguros's 8.6% per annum decline in earnings in the past five years. When earnings per share fall, the maximum amount of dividends that can be paid also falls.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Línea Directa Aseguradora Compañía de Seguros y Reaseguros's dividend payments per share have declined at 22% per year on average over the past five years, which is uninspiring. While it's not great that earnings and dividends per share have fallen in recent years, we're encouraged by the fact that management has trimmed the dividend rather than risk over-committing the company in a risky attempt to maintain yields to shareholders.

The Bottom Line

Is Línea Directa Aseguradora Compañía de Seguros y Reaseguros worth buying for its dividend? Línea Directa Aseguradora Compañía de Seguros y Reaseguros's earnings per share are down over the past five years, although it has the cushion of a low payout ratio, which would suggest a cut to the dividend is relatively unlikely. It might be worth researching if the company is reinvesting in growth projects that could grow earnings and dividends in the future, but for now we're on the fence about its dividend prospects.

So if you want to do more digging on Línea Directa Aseguradora Compañía de Seguros y Reaseguros, you'll find it worthwhile knowing the risks that this stock faces. For example - Línea Directa Aseguradora Compañía de Seguros y Reaseguros has 1 warning sign we think you should be aware of.

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

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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.