Be sure to check out The Brink’s Company (NYSE: BCO) before it goes ex-dividend
It looks like Brink’s company (NYSE: BCO) is set to be ex-dividend within the next 3 days. The ex-dividend date is generally set at one working day before the registration date which is the deadline by which you must be present in the books of the company as a shareholder to receive the dividend. The ex-dividend date is important because every time a stock is bought or sold, the transaction takes at least two business days to settle. This means that you will have to buy Brink’s shares by November 5 to receive the dividend, which will be paid on December 1.
The company’s next dividend will be US $ 0.20 per share, and over the past 12 months the company has paid a total of US $ 0.80 per share. Looking at the last 12 months of distributions, Brink’s has a rolling return of about 1.2% on its current price of $ 68.88. Dividends are an important source of income for many shareholders, but the health of the business is critical to sustaining those dividends. That is why we should always check whether dividend payments seem sustainable and whether the business is growing.
Discover our latest analysis for Brink’s
Dividends are generally paid out of company profits. If a company pays more dividends than it made a profit, then the dividend could be unsustainable. Fortunately, Brink’s payout ratio is modest, at just 43% of profits. Yet cash flow is still more important than earnings in valuing a dividend, so we need to see if the company has generated enough cash to pay for its distribution. The good news is that she has only paid out 9.7% 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 drop sharply.
Click here to view the company’s payout ratio, as well as analysts’ estimates of its future dividends.
Have profits and dividends increased?
Companies that don’t increase their profits can still be valuable, but it’s even more important to assess the sustainability of the dividend if it looks like the business will be struggling to grow. If profits fall and the company is forced to cut its dividend, investors could see the value of their investment go up in smoke. With that in mind, we are not thrilled to see that Brink’s earnings per share have remained stable over the past five years. It’s better than seeing them go down, of course, but over the long term, all the best dividend-paying stocks are capable of significantly increasing their earnings per share. Recent growth has not been impressive. However, companies that see their growth slowing can often choose to pay a higher percentage of their profits to shareholders, which could see the dividend continue to rise.
Many investors will assess a company’s dividend performance by evaluating how much dividend payments have changed over time. Over the past 10 years, Brink’s has increased its dividend by around 7.2% per year on average.
Is Brink’s worth buying for its dividend? The company barely increased its earnings per share during that time, but at least it pays out a decently low percentage of its earnings and cash flow as dividends. This could suggest that management is reinvesting in future growth opportunities. In general, we like to see both low payout ratios and strong earnings per share growth, but Brink’s is halfway there. Overall, we think this is an attractive combination worthy of further research.
In light of this, while Brink’s has an attractive dividend, it is worth knowing the risks associated with this stock. For example, Brink’s has 2 warning signs (and 1 which is of concern) we think you should be aware of.
However, we don’t recommend simply buying the first dividend stock you see. Here is a list of interesting dividend paying stocks with a yield above 2% and a dividend coming soon.
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative material. Simply Wall St has no position in the mentioned stocks.
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