Betterware de MéxicoP.I. de (NASDAQ:BWMX) Is Paying Out A Larger Dividend Than Last Year
Betterware de México, S.A.P.I. de C.V. (NASDAQ:BWMX) will increase its dividend from last year's comparable payment on the 14th of March to MX$0.3521. This makes the dividend yield 4.0%, which is above the industry average.
Check out our latest analysis for Betterware de MéxicoP.I. de
Betterware de MéxicoP.I. de's Earnings Easily Cover The Distributions
While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Before this announcement, Betterware de MéxicoP.I. de was paying out 71% of earnings, but a comparatively small 20% of free cash flows. This leaves plenty of cash for reinvestment into the business.
The next year is set to see EPS grow by 16.9%. If the dividend continues along recent trends, we estimate the payout ratio will be 3.3%, which is in the range that makes us comfortable with the sustainability of the dividend.
Betterware de MéxicoP.I. de's Dividend Has Lacked Consistency
Looking back, the company hasn't been paying the most consistent dividend, but with such a short dividend history it could be too early to draw solid conclusions. The annual payment during the last 4 years was MX$11.60 in 2020, and the most recent fiscal year payment was MX$11.92. Dividend payments have been growing, but very slowly over the period. We're glad to see the dividend has risen, but with a limited rate of growth and fluctuations in the payments the total shareholder return may be limited.
The Dividend Looks Likely To Grow
With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Betterware de MéxicoP.I. de has seen EPS rising for the last five years, at 23% per annum. Earnings per share is growing nicely, but the company is paying out most of its earnings as dividends. This might be sustainable, but we wonder why Betterware de MéxicoP.I. de is not retaining those earnings to reinvest in growth.
We Really Like Betterware de MéxicoP.I. de's Dividend
Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've picked out 2 warning signs for Betterware de MéxicoP.I. de that investors should know about before committing capital to this stock. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
