In This Article:
Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Public Joint Stock Company Best Efforts Bank (MCX:ALBK) is about to trade ex-dividend in the next 4 days. You can purchase shares before the 4th of September in order to receive the dividend, which the company will pay on the 1st of January.
Best Efforts Bank's next dividend payment will be RUруб1.07 per share, on the back of last year when the company paid a total of RUруб1.70 to shareholders. Based on the last year's worth of payments, Best Efforts Bank has a trailing yield of 2.5% on the current stock price of RUB67. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether Best Efforts Bank has been able to grow its dividends, or if the dividend might be cut.
See our latest analysis for Best Efforts Bank
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Best Efforts Bank paid out 119% of profit in the past year, which we think is typically not sustainable unless there are mitigating characteristics such as unusually strong cash flow or a large cash balance.
Generally, the higher a company's payout ratio, the more the dividend is at risk of being reduced.
Click here to see how much of its profit Best Efforts Bank paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. For this reason, we're glad to see Best Efforts Bank's earnings per share have risen 18% per annum over the last five years.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last 6 years, Best Efforts Bank has lifted its dividend by approximately 36% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.
To Sum It Up
From a dividend perspective, should investors buy or avoid Best Efforts Bank? We're not enthused to see Best Efforts Bank's dividend was not well covered by earnings over the last year, although it is great to see earnings growing. In sum this is a middling combination, and we find it hard to get excited about the company from a dividend perspective.