Herdez Group. of (BMV: HERDEZ) could be a buy for its next dividend

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Some investors rely on dividends to grow their wealth, and if you’re one of those dividend sleuths, you might be intrigued to know that Grupo Herdez, SAB de CV (BMV: HERDEZ) is set to be ex-dividend in just 4 days. The ex-dividend date is generally set at one working day before the registration date which is the deadline by which you must be present in the books of the company as a shareholder to receive the dividend. The ex-dividend date is important because the settlement process involves two full business days. So if you miss this date, you will not appear on the books of the company on the date of registration. This means that investors who buy Grupo Herdez. de shares from October 11 will not receive the dividend, which will be paid on October 13.

The company’s next dividend payment will be Mex $ 0.60 per share. Last year, in total, the company distributed Mex $ 1.20 to shareholders. Based on payments from last year, Grupo Herdez. of stock has a sliding return of about 2.9% on the current stock price of MX $ 40.8. We love to see companies pay a dividend, but it’s also important to make sure that laying the golden eggs doesn’t kill our goose that lays the golden eggs! We must therefore investigate whether Grupo Herdez. de can afford its dividend, and whether the dividend could increase.

See our latest analysis for Grupo Herdez. of

If a company pays more dividends than it has earned, then the dividend could become unsustainable – which is not an ideal situation. Herdez Group. de paid out more than half (59%) of its profits last year, which is a steady payout ratio for most companies. A useful secondary check may be to assess whether Grupo Herdez. de generated enough free cash flow to pay its dividend. Fortunately, its dividend payments only took 27% of the free cash flow it generated, which is a comfortable payout ratio.

It’s good to see this Grupo Herdez. de’s dividend is covered by both earnings and cash flow, as this is usually a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend hits. be cut.

Click here to view the company’s payout ratio, as well as analysts’ estimates of its future dividends.

BMV: HERDEZ * Historical dividend October 6, 2021

Have profits and dividends increased?

Companies with strong growth prospects generally make the best dividend payers because dividends are easier to grow when earnings per share improve. If business goes into recession and the dividend is reduced, the company could experience a sharp drop in value. Fortunately for readers, Grupo Herdez. de’s earnings per share have grown 18% per year over the past five years. Herdez Group. de has an average payout ratio that suggests a balance between earnings growth and shareholder reward. Given the rapid rate of growth in earnings per share and the current level of payout, there may be a possibility of further dividend increases in the future.

Another key way to measure a company’s dividend outlook is to measure its historical rate of dividend growth. Herdez Group. de delivered an average annual increase of 4.8% per annum in its dividend, based on dividend payments over the past 10 years. Earnings per share grew much faster than dividends, potentially because of Grupo Herdez. from withholding more of its profits to grow the business.

To summarize

From a dividend perspective, should investors buy or avoid Grupo Herdez. of? Herdez Group. de’s growing earnings per share and conservative payout ratios make a decent combination. We also like the fact that it pays a lower percentage of its cash flow. Overall, we think this is an attractive combination worthy of further research.

While Grupo Herdez. As looks good from a dividend standpoint, it is always worth being aware of the risks inherent in this stock. To help you, we have discovered 2 warning signs for Grupo Herdez. of which you should know before investing in their stocks.

If you are in the dividend-paying stock market, we recommend that you check out our list of the highest dividend-paying stocks with a yield above 2% and a future dividend.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in any of the stocks mentioned.

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