Just Two Days Till Banijay Group N.V. (AMS:BNJ) Will Be Trading Ex-Dividend

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Banijay Group N.V. (AMS:BNJ) is about to go ex-dividend in just 2 days. The ex-dividend date is commonly two business days 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. 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. Meaning, you will need to purchase Banijay Group's shares before the 26th of May to receive the dividend, which will be paid on the 12th of June.

The company's next dividend payment will be €0.35 per share, on the back of last year when the company paid a total of €0.35 to shareholders. Looking at the last 12 months of distributions, Banijay Group has a trailing yield of approximately 3.4% on its current stock price of €10.40. If you buy this business for its dividend, you should have an idea of whether Banijay Group's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.

Our free stock report includes 3 warning signs investors should be aware of before investing in Banijay Group. Read for free now.

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. Last year Banijay Group paid out 101% of its profits as dividends to shareholders, suggesting the dividend is not well covered by earnings. 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. Thankfully its dividend payments took up just 42% of the free cash flow it generated, which is a comfortable payout ratio.

It's disappointing to see that the dividend was not covered by profits, but cash is more important from a dividend sustainability perspective, and Banijay Group fortunately did generate enough cash to fund its dividend. Still, if the company repeatedly paid a dividend greater than its profits, we'd be concerned. Extraordinarily few companies are capable of persistently paying a dividend that is greater than their profits.

See our latest analysis for Banijay Group

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. It's encouraging to see Banijay Group has grown its earnings rapidly, up 110% a year for the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Banijay Group has seen its dividend decline 1.4% per annum on average over the past two years, which is not great to see.

The Bottom Line

Should investors buy Banijay Group for the upcoming dividend? Earnings per share have been rising nicely although, even though its cashflow payout ratio is low, we question why Banijay Group is paying out so much of its profit. All things considered, we are not particularly enthused about Banijay Group from a dividend perspective.

In light of that, while Banijay Group has an appealing dividend, it's worth knowing the risks involved with this stock. To that end, you should learn about the 3 warning signs we've spotted with Banijay Group (including 1 which is potentially serious).

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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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.