Should Income Investors Look At Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. (BMV:OMAB) Before Its Ex-Dividend?

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. (BMV:OMAB) is about to trade ex-dividend in the next 3 days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible 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. This means that investors who purchase Grupo Aeroportuario del Centro Norte. de's shares on or after the 18th of September will not receive the dividend, which will be paid on the 20th of September.

The company's next dividend payment will be Mex$1.28 per share, and in the last 12 months, the company paid a total of Mex$5.90 per share. Last year's total dividend payments show that Grupo Aeroportuario del Centro Norte. de has a trailing yield of 2.8% on the current share price of MX$209.45. If you buy this business for its dividend, you should have an idea of whether Grupo Aeroportuario del Centro Norte. de's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.

View our latest analysis for Grupo Aeroportuario del Centro Norte. 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. Fortunately Grupo Aeroportuario del Centro Norte. de's payout ratio is modest, at just 50% of profit. 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. Over the past year it paid out 126% of its free cash flow as dividends, which is uncomfortably high. It's hard to consistently pay out more cash than you generate without either borrowing or using company cash, so we'd wonder how the company justifies this payout level.

While Grupo Aeroportuario del Centro Norte. de's dividends were covered by the company's reported profits, cash is somewhat more important, so it's not great to see that the company didn't generate enough cash to pay its dividend. Cash is king, as they say, and were Grupo Aeroportuario del Centro Norte. de to repeatedly pay dividends that aren't well covered by cashflow, we would consider this a warning sign.

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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. For this reason, we're glad to see Grupo Aeroportuario del Centro Norte. de's earnings per share have risen 17% per annum over the last 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.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past 10 years, Grupo Aeroportuario del Centro Norte. de has increased its dividend at approximately 7.0% a year on average. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

Final Takeaway

Should investors buy Grupo Aeroportuario del Centro Norte. de for the upcoming dividend? We're glad to see the company has been improving its earnings per share while also paying out a low percentage of income. However, it's not great to see it paying out what we see as an uncomfortably high percentage of its cash flow. Overall, it's hard to get excited about Grupo Aeroportuario del Centro Norte. de from a dividend perspective.

While it's tempting to invest in Grupo Aeroportuario del Centro Norte. de for the dividends alone, you should always be mindful of the risks involved. To help with this, we've discovered 2 warning signs for Grupo Aeroportuario del Centro Norte. de that you should be aware of before investing in their 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.