Be Sure To Check Out Banco BPM S.p.A. (BIT:BAMI) Before It Goes Ex-Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Banco BPM S.p.A. (BIT:BAMI) is about to trade ex-dividend in the next 3 days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Accordingly, Banco BPM investors that purchase the stock on or after the 22nd of April will not receive the dividend, which will be paid on the 24th of April.

The company's next dividend payment will be €0.56 per share, on the back of last year when the company paid a total of €0.56 to shareholders. Last year's total dividend payments show that Banco BPM has a trailing yield of 9.0% on the current share price of €6.25. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to check whether the dividend payments are covered, and if earnings are growing.

Check out our latest analysis for Banco BPM

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Banco BPM is paying out an acceptable 67% 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 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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That's why it's comforting to see Banco BPM's earnings have been skyrocketing, up 37% per annum for the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Banco BPM has delivered an average of 111% per year annual increase in its dividend, based on the past three years of dividend payments. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

The Bottom Line

Should investors buy Banco BPM for the upcoming dividend? Earnings per share are growing at an attractive rate, and Banco BPM is paying out a bit over half its profits. Banco BPM ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.

While it's tempting to invest in Banco BPM for the dividends alone, you should always be mindful of the risks involved. For instance, we've identified 2 warning signs for Banco BPM (1 doesn't sit too well with us) 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.