Income Investors Should Know That Société BIC SA (EPA:BB) Goes Ex-Dividend Soon

Société BIC SA (EPA:BB) stock is about to trade ex-dividend in 4 days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Thus, you can purchase Société BIC's shares before the 16th of September in order to receive the dividend, which the company will pay on the 18th of September.

The company's next dividend payment will be €1.42 per share, and in the last 12 months, the company paid a total of €2.85 per share. Based on the last year's worth of payments, Société BIC has a trailing yield of 4.6% on the current stock price of €61.60. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to check whether the dividend payments are covered, and if earnings are growing.

Check out our latest analysis for Société BIC

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Société BIC is paying out an acceptable 55% of its profit, a common payout level among most companies. A useful secondary check can be to evaluate whether Société BIC generated enough free cash flow to afford its dividend. Thankfully its dividend payments took up just 42% of the free cash flow it generated, which is a comfortable payout ratio.

It's positive to see that Société BIC's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

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

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. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we're encouraged by the steady growth at Société BIC, with earnings per share up 6.5% on average over the last five years. Decent historical earnings per share growth suggests Société BIC has been effectively growing value for shareholders. However, it's now paying out more than half its earnings as dividends. Therefore it's unlikely that the company will be able to reinvest heavily in its business, which could presage slower growth in the future.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Société BIC has delivered 0.9% dividend growth per year on average over the past 10 years.

The Bottom Line

Should investors buy Société BIC for the upcoming dividend? Earnings per share growth has been modest and Société BIC paid out over half of its profits and less than half of its free cash flow, although both payout ratios are within normal limits. Overall, it's not a bad combination, but we feel that there are likely more attractive dividend prospects out there.

So while Société BIC looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. Our analysis shows 1 warning sign for Société BIC and you should be aware of this before buying any shares.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield 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.