Yahoo Finance Banco Latinoamericano de Comercio Exterior S. A (NYSE:BLX) Will Pay A Dividend Of US$0.25
The board of Banco Latinoamericano de Comercio Exterior, S. A. (NYSE:BLX) has announced that it will pay a dividend on the 1st of June, with investors receiving US$0.25 per share. Based on this payment, the dividend yield on the company's stock will be 6.8%, which is an attractive boost to shareholder returns.
View our latest analysis for Banco Latinoamericano de Comercio Exterior S. A
Banco Latinoamericano de Comercio Exterior S. A'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. Prior to this announcement, Banco Latinoamericano de Comercio Exterior S. A's earnings easily covered the dividend, but free cash flows were negative. No cash flows could definitely make returning cash to shareholders difficult, or at least mean the balance sheet will come under pressure.
Unless the company can turn things around, EPS could fall by 5.4% over the next year. If the dividend continues along recent trends, we estimate the payout ratio could be 59%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.
Dividend Volatility
The company's dividend history has been marked by instability, with at least 1 cut in the last 10 years. The first annual payment during the last 10 years was US$0.80 in 2012, and the most recent fiscal year payment was US$1.00. This implies that the company grew its distributions at a yearly rate of about 2.3% over that duration. Modest growth in the dividend is good to see, but we think this is offset by historical cuts to the payments. It is hard to live on a dividend income if the company's earnings are not consistent.
Dividend Growth Is Doubtful
Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Over the past five years, it looks as though Banco Latinoamericano de Comercio Exterior S. A's EPS has declined at around 5.4% a year. Declining earnings will inevitably lead to the company paying a lower dividend in line with lower profits.
Banco Latinoamericano de Comercio Exterior S. A's Dividend Doesn't Look Sustainable
In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Banco Latinoamericano de Comercio Exterior S. A's payments, as there could be some issues with sustaining them into the future. While Banco Latinoamericano de Comercio Exterior S. A is earning enough to cover the payments, the cash flows are lacking. This company is not in the top tier of income providing stocks.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Case in point: We've spotted 2 warning signs for Banco Latinoamericano de Comercio Exterior S. A (of which 1 doesn't sit too well with us!) you should know about. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.
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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.
