Is It Smart To Buy AVANGARD Joint Stock BANK (MCX:AVAN) Before It Goes Ex-Dividend?

It looks like AVANGARD Joint Stock BANK (MCX:AVAN) is about to go ex-dividend in the next 2 days. If you purchase the stock on or after the 21st of December, you won't be eligible to receive this dividend, when it is paid on the 1st of January.

AVANGARD BANK's next dividend payment will be ₽24.78 per share, on the back of last year when the company paid a total of ₽55.76 to shareholders. Based on the last year's worth of payments, AVANGARD BANK stock has a trailing yield of around 5.2% on the current share price of RUB1065. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether AVANGARD BANK can afford its dividend, and if the dividend could grow.

See our latest analysis for AVANGARD BANK

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. AVANGARD BANK paid out 66% of its earnings to investors last year, a normal payout level for most businesses.

Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.

Click here to see how much of its profit AVANGARD BANK paid out over the last 12 months.

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. It's encouraging to see AVANGARD BANK has grown its earnings rapidly, up 30% 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. AVANGARD BANK has delivered an average of 108% per year annual increase in its dividend, based on the past three years of dividend payments. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

To Sum It Up

Should investors buy AVANGARD BANK for the upcoming dividend? Earnings per share are growing nicely, and AVANGARD BANK is paying out a percentage of its earnings that is around the average for dividend-paying stocks. AVANGARD BANK ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.

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

If you're in the market for dividend stocks, we recommend checking our list of top 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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