Caixa Seguridade Participações S.A. (BVMF:CXSE3) Passed Our Checks, And It's About To Pay A R$0.35 Dividend

Readers hoping to buy Caixa Seguridade Participações S.A. (BVMF:CXSE3) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. Typically, the ex-dividend date is two business days before the record date, which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is important as the process of settlement involves at least two full business days. So if you miss that date, you would not show up on the company's books on the record date. Accordingly, Caixa Seguridade Participações investors that purchase the stock on or after the 5th of January will not receive the dividend, which will be paid on the 16th of January.

The company's upcoming dividend is R$0.35 a share, following on from the last 12 months, when the company distributed a total of R$1.14 per share to shareholders. Based on the last year's worth of payments, Caixa Seguridade Participações stock has a trailing yield of around 6.9% on the current share price of R$16.62. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Caixa Seguridade Participações has been able to grow its dividends, or if the dividend might be cut.

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Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. It paid out 87% of its earnings as dividends last year, which is not unreasonable, but limits reinvestment in the business and leaves the dividend vulnerable to a business downturn. We'd be concerned if earnings began to decline.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

See our latest analysis for Caixa Seguridade Participações

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. It's encouraging to see Caixa Seguridade Participações has grown its earnings rapidly, up 23% a year for the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Caixa Seguridade Participações has delivered an average of 24% per year annual increase in its dividend, based on the past four years of dividend payments. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

To Sum It Up

Is Caixa Seguridade Participações an attractive dividend stock, or better left on the shelf? Earnings per share are growing at an attractive rate, and Caixa Seguridade Participações is paying out a bit over half its profits. We think this is a pretty attractive combination, and would be interested in investigating Caixa Seguridade Participações more closely.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. For example - Caixa Seguridade Participações has 1 warning sign we think you should be aware of.

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.

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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.