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Should You Buy BASSAC Société anonyme (EPA:BASS) For Its Upcoming Dividend In 3 Days?

Simply Wall St

BASSAC Société anonyme (EPA:BASS) stock is about to trade ex-dividend in 3 days time. You will need to purchase shares before the 20th of May to receive the dividend, which will be paid on the 22nd of May.

BASSAC Société anonyme's next dividend payment will be €2.50 per share. Last year, in total, the company distributed €2.50 to shareholders. Last year's total dividend payments show that BASSAC Société anonyme has a trailing yield of 6.5% on the current share price of €38.7. If you buy this business for its dividend, you should have an idea of whether BASSAC Société anonyme's dividend is reliable and sustainable. So we need to investigate whether BASSAC Société anonyme can afford its dividend, and if the dividend could grow.

Check out our latest analysis for BASSAC Société anonyme

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. That's why it's good to see BASSAC Société anonyme paying out a modest 41% of its earnings. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. What's good is that dividends were well covered by free cash flow, with the company paying out 21% of its cash flow last year.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

Click here to see how much of its profit BASSAC Société anonyme paid out over the last 12 months.

ENXTPA:BASS Historical Dividend Yield May 15th 2020

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 earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That's why it's comforting to see BASSAC Société anonyme's earnings have been skyrocketing, up 26% per annum for the past five years. Earnings per share have been growing very quickly, and the company is paying out a relatively low percentage of its profit and cash flow. This is a very favourable combination that can often lead to the dividend multiplying over the long term, if earnings grow and the company pays out a higher percentage of its earnings.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. BASSAC Société anonyme has delivered an average of 17% per year annual increase in its dividend, based on the past ten years of dividend payments. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

Final Takeaway

From a dividend perspective, should investors buy or avoid BASSAC Société anonyme? BASSAC Société anonyme has been growing earnings at a rapid rate, and has a conservatively low payout ratio, implying that it is reinvesting heavily in its business; a sterling combination. BASSAC Société anonyme looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. Case in point: We've spotted 2 warning signs for BASSAC Société anonyme you should be aware of.

If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.