Banco Latinoamericano de Comercio Exterior S. A's (NYSE:BLX) Shareholders Will Receive A Bigger Dividend Than Last Year

Banco Latinoamericano de Comercio Exterior, S. A. (NYSE:BLX) will increase its dividend on the 25th of March to $0.625, which is 25% higher than last year's payment from the same period of $0.50. This makes the dividend yield 4.7%, which is above the industry average.

See our latest analysis for Banco Latinoamericano de Comercio Exterior S. A

Banco Latinoamericano de Comercio Exterior S. A's Dividend Forecasted To Be Well Covered By Earnings

If the payments aren't sustainable, a high yield for a few years won't matter that much.

Banco Latinoamericano de Comercio Exterior S. A has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Based on Banco Latinoamericano de Comercio Exterior S. A's last earnings report, the payout ratio is at a decent 37%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Over the next year, EPS is forecast to expand by 5.7%. If the dividend continues along recent trends, we estimate the future payout ratio will be 35%, which is in the range that makes us comfortable with the sustainability of the dividend.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2015, the dividend has gone from $1.40 total annually to $2.00. This works out to be a compound annual growth rate (CAGR) of approximately 3.6% a year over that time. It's encouraging to see some dividend growth, but the dividend has been cut at least once, and the size of the cut would eliminate most of the growth anyway, which makes this less attractive as an income investment.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Banco Latinoamericano de Comercio Exterior S. A has seen EPS rising for the last five years, at 21% per annum. Earnings have been growing rapidly, and with a low payout ratio we think that the company could turn out to be a great dividend stock.

We Really Like Banco Latinoamericano de Comercio Exterior S. A's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 1 warning sign for Banco Latinoamericano de Comercio Exterior S. A that investors need to be conscious of moving forward. If you are a dividend investor, you might also want to look at our curated 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.