It looks like DWS Group GmbH & Co. KGaA( ETR:DWS ) is about to go ex-dividend in the next three days. Typically, the ex-dividend date is two business days 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 of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. Accordingly, DWS Group GmbH KGaA investors that purchase the stock on or after the 4th of June will not receive the dividend, which will be paid on the 8th of June.
The company's next dividend payment will be €3.00 per share, on the back of last year when the company paid a total of €3.00 to shareholders. Based on the last year's worth of payments, DWS Group GmbH KGaA has a trailing yield of 4.8% on the current stock price of €61.95. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether DWS Group GmbH KGaA has been able to grow its dividends, or if the dividend might be cut.
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. DWS Group GmbH KGaA paid out 65% of its earnings to investors last year, a normal payout level for most businesses.
Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.
Check out our latest analysis for DWS Group GmbH KGaA
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. Fortunately for readers, DWS Group GmbH KGaA's earnings per share have been growing at 12% a year for the past five years.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last seven years, DWS Group GmbH KGaA has lifted its dividend by approximately 12% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.
The Bottom Line
Should investors buy DWS Group GmbH KGaA for the upcoming dividend? Earnings per share are growing at an attractive rate, and DWS Group GmbH KGaA is paying out a bit over half its profits. In summary, DWS Group GmbH KGaA appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.
While it's tempting to invest in DWS Group GmbH KGaA for the dividends alone, you should always be mindful of the risks involved. Every company has risks, and we've spotted 1 warning sign for DWS Group GmbH KGaA you should know about.
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.
