Betterware de Mexico. de (NASDAQ:BWMX) Has Re-Affirmed Its Dividend Of US$0.42

The board of Betterware de Mexico, S.A.B. de C.V. (NASDAQ:BWMX) has announced that it will pay a dividend on the 19th of August, with investors receiving US$0.42 per share. The dividend yield will be 4.4% based on this payment which is still above the industry average.

View our latest analysis for Betterware de Mexico. de

Betterware de Mexico. de's Earnings Easily Cover the Distributions

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Based on the last payment, Betterware de Mexico. de was paying only paying out a fraction of earnings, but the payment was a massive 97% of cash flows. A cash payout ratio this high could put the dividend under pressure and force the company to reduce it in the future if it were to run into tough times.

Looking forward, earnings per share is forecast to rise by 133.1% over the next year. If the dividend continues on this path, the payout ratio could be 2.5% by next year, which we think can be pretty sustainable going forward.

Betterware de Mexico. de Is Still Building Its Track Record

It's not possible for us to make a backward looking judgement just based on a short payment history. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. It's encouraging to see Betterware de Mexico. de has been growing its earnings per share at 33% a year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.

In Summary

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. While the low payout ratio is redeeming feature, this is offset by the minimal cash to cover the payments. We would probably look elsewhere for an income investment.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 5 warning signs for Betterware de Mexico. de that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our curated list of strong dividend payers.

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