BB Stock – Only Four Days Left To Cash In On Société BIC’s (EPA:BB) Dividend
Société BIC SA (EPA:BB) stock is about to trade ex-dividend in four 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. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. In other words, investors can purchase Société BIC’s shares before the 31st of May in order to be eligible for the dividend, which will be paid on the 2nd of June.
The company’s next dividend payment will be €1.80 per share. Last year, in total, the company distributed €1.80 to shareholders. Last year’s total dividend payments show that Société BIC has a trailing yield of 2.9% on the current share price of €62.75. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Société BIC has been able to grow its dividends, or if the dividend might be cut.
View our latest analysis for Société BIC
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. That’s why it’s good to see Société BIC paying out a modest 35% of its earnings. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. Fortunately, it paid out only 40% of its free cash flow in the past 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 the company’s payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Businesses with shrinking earnings are tricky from a dividend perspective. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. With that in mind, we’re discomforted by Société BIC’s 5.4% per annum decline in earnings in the past five years. Such a sharp decline casts doubt on the future sustainability of the dividend.
Another key way to measure a company’s dividend prospects is by measuring its historical rate of dividend growth. Société BIC’s dividend payments per share have declined at 0.5% per year on average over the past 10 years, which is uninspiring.
Has Société BIC got what it takes to maintain its dividend payments? Earnings per share are down meaningfully, although at least the company is paying out a low and conservative percentage of both its earnings and cash flow. It’s definitely not great to see earnings falling, but at least there may be some buffer before the dividend needs to be cut. To summarise, Société BIC looks okay on this analysis, although it doesn’t appear a stand-out opportunity.
While it’s tempting to invest in Société BIC for the dividends alone, you should always be mindful of the risks involved. Every company has risks, and we’ve spotted 3 warning signs for Société BIC (of which 1 shouldn’t be ignored!) you should know about.
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.
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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. 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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