BioPharma Credit PLC (LON:BPCR) Passed Our Checks, And It's About To Pay A US$0.018 Dividend
Readers hoping to buy BioPharma Credit PLC (LON:BPCR) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. 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 27th of April will not receive the dividend, which will be paid on the 26th of May.
The company's next dividend payment will be US$0.018 per share, on the back of last year when the company paid a total of US$0.07 to shareholders. Based on the last year's worth of payments, BioPharma Credit has a trailing yield of 7.3% on the current stock price of $0.962. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to check whether the dividend payments are covered, and if earnings are growing.
View 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 is paying out an acceptable 52% of its profit, a common payout level among most companies.
Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.
Click here to see how much of its profit BioPharma Credit paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That's why it's comforting to see BioPharma Credit's earnings have been skyrocketing, up 31% per annum for the past five years.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the past six years, BioPharma Credit has increased its dividend at approximately 9.8% a year on average. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.
Final Takeaway
Is BioPharma Credit an attractive dividend stock, or better left on the shelf? Earnings per share are growing nicely, and BioPharma Credit is paying out a percentage of its earnings that is around the average for dividend-paying stocks. Overall, BioPharma Credit looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
In light of that, while BioPharma Credit has an appealing dividend, it's worth knowing the risks involved with this stock. In terms of investment risks, we've identified 1 warning sign with BioPharma Credit and understanding them should be part of your investment process.
If you're in the market for strong dividend payers, we recommend checking our selection of top 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.
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