Genomma Lab Internacional. de (BMV:LABB) Has Announced A Dividend Of MX$0.20

The board of Genomma Lab Internacional, S.A.B. de C.V. (BMV:LABB) has announced that it will pay a dividend of MX$0.20 per share on the 23rd of December. The dividend yield will be 4.3% based on this payment which is still above the industry average.

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Genomma Lab Internacional. de's Future Dividend Projections Appear Well Covered By Earnings

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Prior to this announcement, Genomma Lab Internacional. de's dividend made up quite a large proportion of earnings but only 50% of free cash flows. This leaves plenty of cash for reinvestment into the business.

The next year is set to see EPS grow by 81.1%. If the dividend continues along recent trends, we estimate the payout ratio will be 33%, which would make us comfortable with the sustainability of the dividend, despite the levels currently being quite high.

View our latest analysis for Genomma Lab Internacional. de

Genomma Lab Internacional. de Doesn't Have A Long Payment History

The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 4 years, which isn't that long in the grand scheme of things. The annual payment during the last 4 years was MX$0.382 in 2021, and the most recent fiscal year payment was MX$0.80. This works out to be a compound annual growth rate (CAGR) of approximately 20% a year over that time. It is always nice to see strong dividend growth, but with such a short payment history we wouldn't be inclined to rely on it until a longer track record can be developed.

The Dividend Has Growth Potential

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. It's encouraging to see that Genomma Lab Internacional. de has been growing its earnings per share at 7.8% a year over the past five years. Recently, the company has been able to grow earnings at a decent rate, but with the payout ratio on the higher end we don't think the dividend has many prospects for growth.

Our Thoughts On Genomma Lab Internacional. de's Dividend

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. The payments haven't been particularly stable and we don't see huge growth potential, but with the dividend well covered by cash flows it could prove to be reliable over the short term. This company is not in the top tier of income providing stocks.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 1 warning sign for Genomma Lab Internacional. de that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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