Be Sure To Check Out B2Gold Corp. (TSE:BTO) Before It Goes Ex-Dividend

Readers hoping to buy B2Gold Corp. (TSE:BTO) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. If you purchase the stock on or after the 5th of March, you won't be eligible to receive this dividend, when it is paid on the 16th of March.

B2Gold's next dividend payment will be US$0.04 per share, on the back of last year when the company paid a total of US$0.16 to shareholders. Looking at the last 12 months of distributions, B2Gold has a trailing yield of approximately 3.7% on its current stock price of CA$5.54. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether B2Gold can afford its dividend, and if the dividend could grow.

See our latest analysis for B2Gold

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. B2Gold is paying out just 18% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. 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. The good news is it paid out just 19% of its free cash flow in the last 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?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That's why it's comforting to see B2Gold's earnings have been skyrocketing, up 69% per annum for the past five years. B2Gold looks like a real growth company, with earnings per share growing at a cracking pace and the company reinvesting most of its profits in the business.

Unfortunately B2Gold has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.

The Bottom Line

Is B2Gold worth buying for its dividend? B2Gold has been growing earnings at a rapid rate, and has a conservatively low payout ratio, implying that it is reinvesting heavily in its business; a sterling combination. It's a promising combination that should mark this company worthy of closer attention.

While it's tempting to invest in B2Gold for the dividends alone, you should always be mindful of the risks involved. For instance, we've identified 4 warning signs for B2Gold (1 is a bit unpleasant) 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.

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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