Should You Buy Société Anonyme des Bains de Mer et du Cercle des Étrangers à Monaco (EPA:BAIN) For Its Upcoming Dividend?

It looks like Société Anonyme des Bains de Mer et du Cercle des Étrangers à Monaco (EPA:BAIN) is about to go ex-dividend in the next 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 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 Anonyme des Bains de Mer et du Cercle des Étrangers à Monaco's shares before the 6th of October in order to receive the dividend, which the company will pay on the 9th of October.

The company's next dividend payment will be €1.80 per share, on the back of last year when the company paid a total of €1.80 to shareholders. Looking at the last 12 months of distributions, Société Anonyme des Bains de Mer et du Cercle des Étrangers à Monaco has a trailing yield of approximately 1.6% on its current stock price of €114.00. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! As a result, readers should always check whether Société Anonyme des Bains de Mer et du Cercle des Étrangers à Monaco has been able to grow its dividends, or if the dividend might be cut.

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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. Société Anonyme des Bains de Mer et du Cercle des Étrangers à Monaco paid out a comfortable 40% of its profit last year. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Over the last year it paid out 69% of its free cash flow as dividends, within the usual range for most companies.

It's positive to see that Société Anonyme des Bains de Mer et du Cercle des Étrangers à Monaco'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.

Check out our latest analysis for Société Anonyme des Bains de Mer et du Cercle des Étrangers à Monaco

Click here to see how much of its profit Société Anonyme des Bains de Mer et du Cercle des Étrangers à Monaco paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. It's encouraging to see Société Anonyme des Bains de Mer et du Cercle des Étrangers à Monaco has grown its earnings rapidly, up 33% a year for the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Société Anonyme des Bains de Mer et du Cercle des Étrangers à Monaco has delivered 22% dividend growth per year on average over the past three years. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

To Sum It Up

From a dividend perspective, should investors buy or avoid Société Anonyme des Bains de Mer et du Cercle des Étrangers à Monaco? From a dividend perspective, we're encouraged to see that earnings per share have been growing, the company is paying out less than half of its earnings, and a bit over half its free cash flow. It's a promising combination that should mark this company worthy of closer attention.

Keen to explore more data on Société Anonyme des Bains de Mer et du Cercle des Étrangers à Monaco's financial performance? Check out our visualisation of its historical revenue and earnings growth.

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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.