Genomma Lab Internacional, S.A.B. de C.V. (BMV:LABB) Stock Goes Ex-Dividend In Just Four Days

Readers hoping to buy Genomma Lab Internacional, S.A.B. de C.V. (BMV:LABB) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is usually set to be one business day 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 Genomma Lab Internacional. de's shares before the 21st of March in order to receive the dividend, which the company will pay on the 25th of March.

The company's upcoming dividend is Mex$0.19608 a share, following on from the last 12 months, when the company distributed a total of Mex$0.78 per share to shareholders. Based on the last year's worth of payments, Genomma Lab Internacional. de has a trailing yield of 5.3% on the current stock price of Mex$14.70. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Genomma Lab Internacional. de has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for Genomma Lab Internacional. de

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. Genomma Lab Internacional. de paid out more than half (68%) of its earnings last year, which is a regular payout ratio for most companies. 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. Thankfully its dividend payments took up just 27% of the free cash flow it generated, which is a comfortable payout ratio.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

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

Have Earnings And Dividends Been Growing?

Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If earnings fall far enough, the company could be forced to cut its dividend. That explains why we're not overly excited about Genomma Lab Internacional. de's flat earnings over the past five years. It's better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share. Earnings per share growth has been slim, and the company is already paying out a majority of its earnings. While there is some room to both increase the payout ratio and reinvest in the business, generally the higher a payout ratio goes, the lower a company's prospects for future growth.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the past two years, Genomma Lab Internacional. de has increased its dividend at approximately 43% a year on average.

To Sum It Up

Should investors buy Genomma Lab Internacional. de for the upcoming dividend? It's unfortunate that earnings per share have not grown, and we'd note that Genomma Lab Internacional. de is paying out lower percentage of its cashflow than its profit, but overall the dividend looks well covered by earnings. To summarise, Genomma Lab Internacional. de looks okay on this analysis, although it doesn't appear a stand-out opportunity.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. In terms of investment risks, we've identified 3 warning signs with Genomma Lab Internacional. de and understanding them should be part of your investment process.

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.