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Banco Latinoamericano de Comercio Exterior, S.A (NYSE:BLX) stock is about to trade ex-dividend in 4 days. You can purchase shares before the 6th of November in order to receive the dividend, which the company will pay on the 25th of November.
Banco Latinoamericano de Comercio Exterior'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. Based on the last year's worth of payments, Banco Latinoamericano de Comercio Exterior stock has a trailing yield of around 7.8% on the current share price of $12.79. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! 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
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Banco Latinoamericano de Comercio Exterior paid out 52% of its earnings to investors last year, a normal payout level for most businesses.
When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.
Have Earnings And Dividends Been Growing?
Businesses with shrinking earnings are tricky from a dividend perspective. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. So we're not too excited that Banco Latinoamericano de Comercio Exterior's earnings are down 3.8% a year over 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 has delivered 5.2% dividend growth per year on average over the past 10 years. Growing the dividend payout ratio while earnings are declining can deliver nice returns for a while, but it's always worth checking for when the company can't increase the payout ratio any more - because then the music stops.
The Bottom Line
From a dividend perspective, should investors buy or avoid Banco Latinoamericano de Comercio Exterior? We're not overly enthused to see Banco Latinoamericano de Comercio Exterior's earnings in retreat at the same time as the company is paying out more than half of its earnings as dividends to shareholders. This is not an overtly appealing combination of characteristics, and we're just not that interested in this company's dividend.