BioPharma Credit PLC (LON:BPCR) Looks Interesting, And It's About To Pay A Dividend
Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that BioPharma Credit PLC (LON:BPCR) is about to go ex-dividend in just 3 days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Accordingly, BioPharma Credit investors that purchase the stock on or after the 7th of December will not receive the dividend, which will be paid on the 5th of January.
The company's next dividend payment will be US$0.037 per share, and in the last 12 months, the company paid a total of US$0.07 per share. Calculating the last year's worth of payments shows that BioPharma Credit has a trailing yield of 8.1% on the current share price of $0.864. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
Check out our latest analysis for BioPharma Credit
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. BioPharma Credit paid out 50% of its earnings to investors last year, a normal payout level for most businesses.
When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.
Click here to see how much of its profit BioPharma Credit paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's encouraging to see BioPharma Credit has grown its earnings rapidly, up 32% a year for the past five years.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. BioPharma Credit has delivered an average of 9.8% per year annual increase in its dividend, based on the past six years of dividend payments. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.
The Bottom Line
Is BioPharma Credit worth buying for its dividend? BioPharma Credit has an acceptable payout ratio and its earnings per share have been improving at a decent rate. We think this is a pretty attractive combination, and would be interested in investigating BioPharma Credit more closely.
While it's tempting to invest in BioPharma Credit for the dividends alone, you should always be mindful of the risks involved. Every company has risks, and we've spotted 1 warning sign for BioPharma Credit you should know about.
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.
