It looks like Popular, Inc. (NASDAQ:BPOP) is about to go ex-dividend in the next 4 days. This means that investors who purchase shares on or after the 4th of September will not receive the dividend, which will be paid on the 1st of October.
Popular's next dividend payment will be US$0.40 per share. Last year, in total, the company distributed US$1.60 to shareholders. Calculating the last year's worth of payments shows that Popular has a trailing yield of 4.2% on the current share price of $38.1. If you buy this business for its dividend, you should have an idea of whether Popular's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.
View our latest analysis for Popular
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Popular paid out a comfortable 26% 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 the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. With that in mind, we're not enthused to see that Popular's earnings per share have remained effectively flat over the past five years. We'd take that over an earnings decline any day, but in the long run, the best dividend stocks all grow their earnings per share.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Popular has delivered 22% dividend growth per year on average over the past five years.
Final Takeaway
Has Popular got what it takes to maintain its dividend payments? Popular's earnings per share have not grown at all in recent years, although we like that it is paying out a low percentage of its earnings. In sum this is a middling combination, and we find it hard to get excited about the company from a dividend perspective.
If you're not too concerned about Popular's ability to pay dividends, you should still be mindful of some of the other risks that this business faces. Our analysis shows 2 warning signs for Popular that we strongly recommend you have a look at before investing in the company.
We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
This article by Simply Wall St is general in nature. 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.
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August 30, 2020 at 07:06PM
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Read This Before Considering Popular, Inc. (NASDAQ:BPOP) For Its Upcoming US$0.40 Dividend - Yahoo Finance
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