There's A Lot To Like About Transilvania Broker de Asigurare's (BVB:TBK) Upcoming RON2.00 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 Transilvania Broker de Asigurare S.A. (BVB:TBK) is about to go ex-dividend in just three 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. Therefore, if you purchase Transilvania Broker de Asigurare's shares on or after the 25th of May, you won't be eligible to receive the dividend, when it is paid on the 15th of June.

The company's next dividend payment will be RON2.00 per share, and in the last 12 months, the company paid a total of RON2.00 per share. Calculating the last year's worth of payments shows that Transilvania Broker de Asigurare has a trailing yield of 9.2% on the current share price of RON21.8. If you buy this business for its dividend, you should have an idea of whether Transilvania Broker de Asigurare's dividend is reliable and sustainable. So we need to investigate whether Transilvania Broker de Asigurare can afford its dividend, and if the dividend could grow.

See our latest analysis for Transilvania Broker de Asigurare

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Its dividend payout ratio is 87% of profit, which means the company is paying out a majority of its earnings. The relatively limited profit reinvestment could slow the rate of future earnings growth. We'd be worried about the risk of a drop in earnings.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

Click here to see how much of its profit Transilvania Broker de Asigurare paid out over the last 12 months.

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. It's encouraging to see Transilvania Broker de Asigurare has grown its earnings rapidly, up 26% a year for the past five years.

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, five years ago, Transilvania Broker de Asigurare has lifted its dividend by approximately 31% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

To Sum It Up

Should investors buy Transilvania Broker de Asigurare for the upcoming dividend? Earnings per share are growing at an attractive rate, and Transilvania Broker de Asigurare is paying out a bit over half its profits. Overall, Transilvania Broker de Asigurare looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

While it's tempting to invest in Transilvania Broker de Asigurare for the dividends alone, you should always be mindful of the risks involved. Case in point: We've spotted 2 warning signs for Transilvania Broker de Asigurare you should be aware of.

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.

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

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.