Stock Analysis

Banco BPM S.p.A. (BIT:BAMI) Looks Interesting, And It's About To Pay A Dividend

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Banco BPM S.p.A. (BIT:BAMI) is about to trade ex-dividend in the next three 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. 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. Thus, you can purchase Banco BPM's shares before the 19th of April in order to receive the dividend, which the company will pay on the 21st of April.

The company's next dividend payment will be €0.19 per share, on the back of last year when the company paid a total of €0.19 to shareholders. Looking at the last 12 months of distributions, Banco BPM has a trailing yield of approximately 6.2% on its current stock price of €3.06. 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 Banco BPM

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. Banco BPM paid out more than half (50%) of its earnings last year, which is a regular payout ratio for most companies.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

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

BIT:BAMI Historic Dividend April 15th 2022

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. 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 Banco BPM has grown its earnings rapidly, up 24% a year for the past five years.

Banco BPM also issued more than 5% of its market cap in new stock during the past year, which we feel is likely to hurt its dividend prospects in the long run. It's hard to grow dividends per share when a company keeps creating new shares.

Given that Banco BPM has only been paying a dividend for a year, there's not much of a past history to draw insight from.

To Sum It Up

Is Banco BPM worth buying for its dividend? Earnings per share are growing at an attractive rate, and Banco BPM is paying out a bit over half its profits. Overall, Banco BPM looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

While it's tempting to invest in Banco BPM for the dividends alone, you should always be mindful of the risks involved. For example - Banco BPM has 1 warning sign we think you should be aware of.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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

Find out whether Banco BPM 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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