Ernst Russ AG( ETR:ERAG ) is about to trade ex-dividend in the next four days. The ex-dividend date is two business days before a company's record date in most cases, which is the date on which the company determines which shareholders are entitled 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. This means that investors who purchase Ernst Russ' shares on or after the 5th of June will not receive the dividend, which will be paid on the 9th of June.
The company's next dividend payment will be €0.25 per share, and in the last 12 months, the company paid a total of €0.25 per share. Calculating the last year's worth of payments shows that Ernst Russ has a trailing yield of 2.7% on the current share price of €9.10. If you buy this business for its dividend, you should have an idea of whether Ernst Russ's dividend is reliable and sustainable. As a result, readers should always check whether Ernst Russ has been able to grow its dividends, or if the dividend might be cut.
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Ernst Russ has a low and conservative payout ratio of just 11% of its income after tax.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
See our latest analysis for Ernst Russ
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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. It's encouraging to see Ernst Russ has grown its earnings rapidly, up 71% 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 past three years, Ernst Russ has increased its dividend at approximately 7.7% a year on average. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.
To Sum It Up
Has Ernst Russ got what it takes to maintain its dividend payments? Companies like Ernst Russ that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. Ernst Russ ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.
While it's tempting to invest in Ernst Russ for the dividends alone, you should always be mindful of the risks involved. For example, Ernst Russ has 3 warning signs (and 2 which don't sit too well with us) we think you should know about.
Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.
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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.
