Stock Analysis

Why You Might Be Interested In Banco Latinoamericano de Comercio Exterior, S. A. (NYSE:BLX) For Its Upcoming Dividend

NYSE:BLX
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It looks like Banco Latinoamericano de Comercio Exterior, S. A. (NYSE:BLX) is about to go ex-dividend in the next four days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. This means that investors who purchase Banco Latinoamericano de Comercio Exterior S. A's shares on or after the 27th of October will not receive the dividend, which will be paid on the 16th of November.

The company's upcoming dividend is US$0.25 a share, following on from the last 12 months, when the company distributed a total of US$1.00 per share to shareholders. Looking at the last 12 months of distributions, Banco Latinoamericano de Comercio Exterior S. A has a trailing yield of approximately 4.5% on its current stock price of $22.11. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. We need to see whether the dividend is covered by earnings and if it's growing.

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

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. Banco Latinoamericano de Comercio Exterior S. A paid out a comfortable 28% of its profit last year.

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 Banco Latinoamericano de Comercio Exterior S. A paid out over the last 12 months.

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NYSE:BLX Historic Dividend October 22nd 2023

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 earnings fall far enough, the company could be forced to cut its dividend. Fortunately for readers, Banco Latinoamericano de Comercio Exterior S. A's earnings per share have been growing at 15% 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. Banco Latinoamericano de Comercio Exterior S. A's dividend payments per share have declined at 1.8% per year on average over the past 10 years, which is uninspiring.

Final Takeaway

Has Banco Latinoamericano de Comercio Exterior S. A got what it takes to maintain its dividend payments? Companies like Banco Latinoamericano de Comercio Exterior S. A that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. Banco Latinoamericano de Comercio Exterior S. A 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.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. Every company has risks, and we've spotted 1 warning sign for Banco Latinoamericano de Comercio Exterior S. A you should know about.

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.

Valuation is complex, but we're helping make it simple.

Find out whether Banco Latinoamericano de Comercio Exterior S. A is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.