There are only four days left to collect the dividend from Société BIC (EPA: BB)
BIC SA Company (EPA: BB) is set to trade ex-dividend in four days. Typically, the ex-dividend date is one business day prior to the record date which is the date a company determines which shareholders are eligible to receive a dividend. It is important to know the ex-dividend date, as any transaction in the share must have been settled by the registration date at the latest. In other words, investors can buy the shares of Société BIC before May 31 in order to be eligible for the dividend, which will be paid out on June 2.
The company’s next dividend will be € 1.80 per share. Last year, in total, the company distributed € 1.80 to shareholders. The total dividend payments for the last year show that the BIC Company has a final yield of 2.9% on the current price of 62.75 €. Dividends are an important source of income for many shareholders, but the health of the company is crucial to sustaining these dividends. Consequently, readers should always check whether Société BIC has been able to increase its dividends, or whether the dividend could be reduced.
Consult our latest analysis for the BIC Company
Dividends are usually paid out of company income, so if a company pays more than it earned, its dividend is generally at a higher risk of being reduced. This is why it is good to see Société BIC donating a modest 35% of its profits. Having said that, even very profitable companies can sometimes not generate enough cash to pay the dividend, which is why we always need to check if the dividend is covered by the cash flow. Fortunately, she only paid 40% of her free cash flow in the past year.
It is encouraging to see that the dividend is covered by both earnings and cash flow. This usually suggests that the dividend is sustainable, as long as profits don’t fall precipitously.
Click here to view the company’s payout ratio, as well as analysts’ estimates of its future dividends.
Have profits and dividends increased?
Companies with declining profits are tricky from a dividend standpoint. If profits decline and the company is forced to cut its dividend, investors could see the value of their investment go up in smoke. From this perspective, we are hampered by the 5.4% per year drop in the profits of Société BIC over the past five years. Such a sharp drop casts doubt on the future viability of the dividend.
Another key way to measure a company’s dividend outlook is to measure its historical rate of dividend growth. The dividend payments per share of Société BIC have fallen by 0.5% per year on average over the past 10 years, which is not interesting.
Does Société BIC have what it takes to maintain its dividends? Earnings per share are down significantly, even though at least the company is paying a small and conservative percentage of its earnings and cash flow. It’s certainly not great to see the profits go down, but at least there can be a buffer before the dividend has to be cut. To sum up, Société BIC looks good on this analysis, even if it does not seem like an exceptional opportunity.
While it is tempting to invest in Société BIC solely for dividends, you should always be aware of the risks involved. Every business has risks, and we have spotted 3 warning signs for Société BIC (of which 1 should not be ignored!) that you should know.
A common investment mistake is to buy the first interesting stock you see. Here you will find a list of promising dividend paying stocks with a yield above 2% and an upcoming dividend.
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