Three Days Left Until Promotora y Operadora de Infraestructura, S. A. B. de C. V. (BMV:PINFRA) Trades Ex-Dividend

It looks like Promotora y Operadora de Infraestructura, S. A. B. de C. V. (BMV:PINFRA) is about to go ex-dividend in the next 3 days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Accordingly, Promotora y Operadora de Infraestructura S. A. B. de C. V investors that purchase the stock on or after the 18th of December will not receive the dividend, which will be paid on the 20th of December.

The company's next dividend payment will be Mex$2.66 per share, on the back of last year when the company paid a total of Mex$5.32 to shareholders. Looking at the last 12 months of distributions, Promotora y Operadora de Infraestructura S. A. B. de C. V has a trailing yield of approximately 3.1% on its current stock price of MX$172.78. If you buy this business for its dividend, you should have an idea of whether Promotora y Operadora de Infraestructura S. A. B. de C. V's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.

Check out our latest analysis for Promotora y Operadora de Infraestructura S. A. B. de C. V

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. Promotora y Operadora de Infraestructura S. A. B. de C. V paid out more than half (65%) 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 39% of the free cash flow it generated, which is a comfortable payout ratio.

It's positive to see that Promotora y Operadora de Infraestructura S. A. B. de C. V'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?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we're encouraged by the steady growth at Promotora y Operadora de Infraestructura S. A. B. de C. V, with earnings per share up 3.1% on average over the last five years. Earnings growth has been slim and the company is paying out more than half 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.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, eight years ago, Promotora y Operadora de Infraestructura S. A. B. de C. V has lifted its dividend by approximately 24% 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.

The Bottom Line

From a dividend perspective, should investors buy or avoid Promotora y Operadora de Infraestructura S. A. B. de C. V? Earnings per share growth has been modest and Promotora y Operadora de Infraestructura S. A. B. de C. V paid out over half of its profits and less than half of its free cash flow, although both payout ratios are within normal limits. While it does have some good things going for it, we're a bit ambivalent and it would take more to convince us of Promotora y Operadora de Infraestructura S. A. B. de C. V's dividend merits.

On that note, you'll want to research what risks Promotora y Operadora de Infraestructura S. A. B. de C. V is facing. To help with this, we've discovered 2 warning signs for Promotora y Operadora de Infraestructura S. A. B. de C. V that you should be aware of before investing in their shares.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield 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.