Read This Before Considering Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (BMV:GAPB) For Its Upcoming Mex$6.93 Dividend

Readers hoping to buy Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (BMV:GAPB) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Therefore, if you purchase Grupo Aeroportuario del Pacífico. de's shares on or after the 22nd of July, you won't be eligible to receive the dividend, when it is paid on the 23rd of July.

The company's upcoming dividend is Mex$6.93 a share, following on from the last 12 months, when the company distributed a total of Mex$14.84 per share to shareholders. Calculating the last year's worth of payments shows that Grupo Aeroportuario del Pacífico. de has a trailing yield of 5.0% on the current share price of Mex$296.27. If you buy this business for its dividend, you should have an idea of whether Grupo Aeroportuario del Pacífico. de's dividend is reliable and sustainable. As a result, readers should always check whether Grupo Aeroportuario del Pacífico. de has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for Grupo Aeroportuario del Pacífico. 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. It paid out 83% of its earnings as dividends last year, which is not unreasonable, but limits reinvestment in the business and leaves the dividend vulnerable to a business downturn. It could become a concern if earnings started to decline. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Grupo Aeroportuario del Pacífico. de paid out more free cash flow than it generated - 138%, to be precise - last year, which we think is concerningly high. We're curious about why the company paid out more cash than it generated last year, since this can be one of the early signs that a dividend may be unsustainable.

Grupo Aeroportuario del Pacífico. de paid out less in dividends than it reported in profits, but unfortunately it didn't generate enough cash to cover the dividend. Were this to happen repeatedly, this would be a risk to Grupo Aeroportuario del Pacífico. de's ability to maintain its dividend.

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

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. Fortunately for readers, Grupo Aeroportuario del Pacífico. de's earnings per share have been growing at 15% a year for the past five years. Earnings have been growing at a decent rate, but we're concerned dividend payments consumed most of the company's cash flow over the past year.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Grupo Aeroportuario del Pacífico. de has delivered an average of 17% per year annual increase in its dividend, based on the past 10 years of dividend payments. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

To Sum It Up

Is Grupo Aeroportuario del Pacífico. de worth buying for its dividend? It's good to see that earnings per share are growing and that the company's payout ratio is within a normal range for most businesses. However we're somewhat concerned that it paid out 138% of its cashflow, which is uncomfortably high. While it does have some good things going for it, we're a bit ambivalent and it would take more to convince us of Grupo Aeroportuario del Pacífico. de's dividend merits.

With that being said, if dividends aren't your biggest concern with Grupo Aeroportuario del Pacífico. de, you should know about the other risks facing this business. Our analysis shows 2 warning signs for Grupo Aeroportuario del Pacífico. de and you should be aware of them before buying any shares.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com