Interested In GMéxico Transportes. de's (BMV:GMXT) Upcoming Mex$0.30 Dividend? You Have Three Days Left

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see GMéxico Transportes, S.A.B. de C.V. (BMV:GMXT) is about to trade ex-dividend in the next 3 days. You can purchase shares before the 19th of February in order to receive the dividend, which the company will pay on the 23rd of February.

GMéxico Transportes. de's next dividend payment will be Mex$0.30 per share. Last year, in total, the company distributed Mex$1.05 to shareholders. Based on the last year's worth of payments, GMéxico Transportes. de stock has a trailing yield of around 3.4% on the current share price of MX$31.24. If you buy this business for its dividend, you should have an idea of whether GMéxico Transportes. de's dividend is reliable and sustainable. As a result, readers should always check whether GMéxico Transportes. de has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for GMéxico Transportes. 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. GMéxico Transportes. de paid out 73% of its earnings to investors last year, a normal payout level for most businesses. 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 35% of the free cash flow it generated, which is a comfortable payout ratio.

It's positive to see that GMéxico Transportes. 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?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. This is why it's a relief to see GMéxico Transportes. de earnings per share are up 4.6% per annum over the last five years. 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. GMéxico Transportes. de has delivered an average of 21% per year annual increase in its dividend, based on the past three years of dividend payments. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

The Bottom Line

Has GMéxico Transportes. de got what it takes to maintain its dividend payments? While earnings per share growth has been modest, GMéxico Transportes. de's dividend payouts are around an average level; without a sharp change in earnings we feel that the dividend is likely somewhat sustainable. Pleasingly the company paid out a conservatively low percentage of its free cash flow. Overall we're not hugely bearish on the stock, but there are likely better dividend investments out there.

On that note, you'll want to research what risks GMéxico Transportes. de is facing. Our analysis shows 2 warning signs for GMéxico Transportes. de and you should be aware of them before buying any shares.

We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.

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This article by Simply Wall St is general in nature. 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.
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