U.S. markets closed
  • S&P 500

    3,719.04
    +71.75 (+1.97%)
     
  • Dow 30

    29,683.74
    +548.75 (+1.88%)
     
  • Nasdaq

    11,051.64
    +222.13 (+2.05%)
     
  • Russell 2000

    1,715.24
    +52.73 (+3.17%)
     
  • Crude Oil

    81.73
    -0.42 (-0.51%)
     
  • Gold

    1,666.60
    -3.40 (-0.20%)
     
  • Silver

    18.88
    -0.00 (-0.03%)
     
  • EUR/USD

    0.9726
    +0.0128 (+1.33%)
     
  • 10-Yr Bond

    3.7050
    -0.2590 (-6.53%)
     
  • GBP/USD

    1.0864
    +0.0133 (+1.24%)
     
  • USD/JPY

    144.2090
    -0.5820 (-0.40%)
     
  • BTC-USD

    19,545.95
    +500.97 (+2.63%)
     
  • CMC Crypto 200

    447.10
    +18.32 (+4.27%)
     
  • FTSE 100

    7,005.39
    +20.80 (+0.30%)
     
  • Nikkei 225

    26,173.98
    -397.89 (-1.50%)
     

Is It Smart To Buy The Brink's Company (NYSE:BCO) Before It Goes Ex-Dividend?

·4 min read

The Brink's Company (NYSE:BCO) is about to trade ex-dividend in the next 4 days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Thus, you can purchase Brink's' shares before the 4th of February in order to receive the dividend, which the company will pay on the 1st of March.

The company's next dividend payment will be US$0.20 per share, and in the last 12 months, the company paid a total of US$0.80 per share. Looking at the last 12 months of distributions, Brink's has a trailing yield of approximately 1.1% on its current stock price of $69.93. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether Brink's has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Brink's

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. Brink's paid out a comfortable 43% of its profit last year. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Luckily it paid out just 9.7% of its free cash flow last year.

It's positive to see that Brink's's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

historic-dividend
historic-dividend

Have Earnings And Dividends Been Growing?

Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. With that in mind, we're not enthused to see that Brink's's earnings per share have remained effectively flat over the past five years. Better than seeing them fall off a cliff, for sure, but the best dividend stocks grow their earnings meaningfully over the long run. Recent growth has not been impressive. Yet there are several ways to grow the dividend, and one of them is simply that the company may choose to pay out more of its earnings as dividends.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, 10 years ago, Brink's has lifted its dividend by approximately 7.2% a year on average.

Final Takeaway

Should investors buy Brink's for the upcoming dividend? The company has barely grown earnings per share over this time, but at least it's paying out a decently low percentage of its earnings and cashflow as dividends. This could suggest management is reinvesting in future growth opportunities. We would prefer to see earnings growing faster, but the best dividend stocks over the long term typically combine strong earnings per share growth with a low payout ratio, and Brink's is halfway there. It's a promising combination that should mark this company worthy of closer attention.

On that note, you'll want to research what risks Brink's is facing. Case in point: We've spotted 1 warning sign for Brink's you should be aware of.

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.

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.