Read This Before Considering Banque nationale de Belgique Société anonyme (EBR:BNB) For Its Upcoming €96.63 Dividend

Banque nationale de Belgique Société anonyme (EBR:BNB) is about to trade ex-dividend in the next 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. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. This means that investors who purchase Banque nationale de Belgique Société anonyme’s shares on or after the 18th of May will not receive the dividend, which will be paid on the 20th of May.

The company’s next dividend payment will be €96.63 per share. Last year, in total, the company distributed €138 to shareholders. Based on the last year’s worth of payments, Banque nationale de Belgique Société anonyme stock has a trailing yield of around 8.0% on the current share price of €1725. If you buy this business for its dividend, you should have an idea of whether Banque nationale de Belgique Société anonyme’s dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.

See our latest analysis for Banque nationale de Belgique Société anonyme

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. Banque nationale de Belgique Société anonyme paid out just 16% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances.

When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.

Click here to see how much of its profit Banque nationale de Belgique Société anonyme paid out over the last 12 months.

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 Banque nationale de Belgique Société anonyme’s 11% 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. Banque nationale de Belgique Société anonyme’s dividend payments are broadly unchanged compared to where they were 10 years ago. When earnings are declining yet the dividends are flat, typically the company is either paying out a higher portion of its earnings, or paying out of cash or debt on the balance sheet, neither of which is ideal.

The Bottom Line

From a dividend perspective, should investors buy or avoid Banque nationale de Belgique Société anonyme? Banque nationale de Belgique Société anonyme’s earnings per share are down over the past five years, although it has the cushion of a low payout ratio, which would suggest a cut to the dividend is relatively unlikely. It doesn’t appear an outstanding opportunity, but could be worth a closer look.

However if you’re still interested in Banque nationale de Belgique Société anonyme as a potential investment, you should definitely consider some of the risks involved with Banque nationale de Belgique Société anonyme. For example – Banque nationale de Belgique Société anonyme has 1 warning sign we think you should be aware of.

A common investing mistake is buying the first interesting stock you see. Here you can find a full 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.