Stock Analysis

Do These 3 Checks Before Buying CFM Indosuez Wealth Management SA (EPA:MLCFM) For Its Upcoming Dividend

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Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see CFM Indosuez Wealth Management SA (EPA:MLCFM) is about to trade ex-dividend in the next 3 days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Meaning, you will need to purchase CFM Indosuez Wealth Management's shares before the 9th of December to receive the dividend, which will be paid on the 13th of December.

The company's next dividend payment will be €35.00 per share, which looks like a nice increase on last year, when the company distributed a total of €20.27 to shareholders. If you buy this business for its dividend, you should have an idea of whether CFM Indosuez Wealth Management's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.

See our latest analysis for CFM Indosuez Wealth Management

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. CFM Indosuez Wealth Management is paying out an acceptable 53% of its profit, a common payout level among most companies.

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 CFM Indosuez Wealth Management paid out over the last 12 months.

ENXTPA:MLCFM Historic Dividend December 5th 2021

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. CFM Indosuez Wealth Management's earnings per share have fallen at approximately 14% a year over the previous five years. Such a sharp decline casts doubt on the future sustainability of the dividend.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. CFM Indosuez Wealth Management's dividend payments per share have declined at 7.8% per year on average over the past 10 years, which is uninspiring. 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 CFM Indosuez Wealth Management an attractive dividend stock, or better left on the shelf? We're not overly enthused to see CFM Indosuez Wealth Management's earnings in retreat at the same time as the company is paying out more than half of its earnings as dividends to shareholders. CFM Indosuez Wealth Management doesn't appear to have a lot going for it, and we're not inclined to take a risk on owning it for the dividend.

With that being said, if you're still considering CFM Indosuez Wealth Management as an investment, you'll find it beneficial to know what risks this stock is facing. For instance, we've identified 4 warning signs for CFM Indosuez Wealth Management (1 is concerning) you should be aware of.

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.

Valuation is complex, but we're helping make it simple.

Find out whether CFM Indosuez Wealth Management is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.