Interested In Fomento Económico Mexicano. de's (BMV:FEMSAUBD) Upcoming Mex$1.83 Dividend? You Have Four Days Left

Fomento Económico Mexicano, S.A.B. de C.V. (BMV:FEMSAUBD) stock is about to trade ex-dividend in 4 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. Meaning, you will need to purchase Fomento Económico Mexicano. de's shares before the 3rd of November to receive the dividend, which will be paid on the 7th of November.

The company's upcoming dividend is Mex$1.83 a share, following on from the last 12 months, when the company distributed a total of Mex$3.66 per share to shareholders. Looking at the last 12 months of distributions, Fomento Económico Mexicano. de has a trailing yield of approximately 1.9% on its current stock price of MX$192.87. If you buy this business for its dividend, you should have an idea of whether Fomento Económico Mexicano. de's dividend is reliable and sustainable. So we need to investigate whether Fomento Económico Mexicano. de can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Fomento Económico Mexicano. de

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Fomento Económico Mexicano. de paid out a comfortable 39% of its profit last year. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. Dividends consumed 64% of the company's free cash flow last year, which is within a normal range for most dividend-paying organisations.

It's positive to see that Fomento Económico Mexicano. de'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 falling earnings are riskier for dividend shareholders. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. So we're not too excited that Fomento Económico Mexicano. de's earnings are down 3.7% a year over the past five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last 10 years, Fomento Económico Mexicano. de has lifted its dividend by approximately 6.2% a year on average.

Final Takeaway

From a dividend perspective, should investors buy or avoid Fomento Económico Mexicano. de? Earnings per share have fallen significantly, although at least Fomento Económico Mexicano. de paid out less than half of its profits and free cash flow over the last year, leaving some margin of safety. Overall we're not hugely bearish on the stock, but there are likely better dividend investments out there.

Ever wonder what the future holds for Fomento Económico Mexicano. de? See what the 14 analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow

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.