Yahoo Finance Palfinger AG's (VIE:PAL) Could Be A Buy For Its Upcoming Dividend
Palfinger AG (VIE:PAL) is about to trade ex-dividend in the next 4 days. If you purchase the stock on or after the 20th of March, you won't be eligible to receive this dividend, when it is paid on the 24th of March.
Palfinger's next dividend payment will be €0.71 per share, and in the last 12 months, the company paid a total of €0.71 per share. Last year's total dividend payments show that Palfinger has a trailing yield of 3.9% on the current share price of €18.24. If you buy this business for its dividend, you should have an idea of whether Palfinger's dividend is reliable and sustainable. As a result, readers should always check whether Palfinger has been able to grow its dividends, or if the dividend might be cut.
Check out our latest analysis for Palfinger
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. Palfinger paid out a comfortable 33% of its profit last year. A useful secondary check can be to evaluate whether Palfinger generated enough free cash flow to afford its dividend. Thankfully its dividend payments took up just 32% of the free cash flow it generated, which is a comfortable payout ratio.
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?
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 decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Fortunately for readers, Palfinger's earnings per share have been growing at 15% a year for the past five years. Earnings per share have been growing rapidly and the company is retaining a majority of its earnings within the business. This will make it easier to fund future growth efforts and we think this is an attractive combination - plus the dividend can always be increased later.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Palfinger has delivered an average of 14% per year annual increase in its dividend, based on the past nine years of dividend payments. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.
To Sum It Up
Should investors buy Palfinger for the upcoming dividend? Palfinger has grown its earnings per share while simultaneously reinvesting in the business. Unfortunately it's cut the dividend at least once in the past nine years, but the conservative payout ratio makes the current dividend look sustainable. Overall we think this is an attractive combination and worthy of further research.
While it's tempting to invest in Palfinger for the dividends alone, you should always be mindful of the risks involved. Every company has risks, and we've spotted 3 warning signs for Palfinger you should know about.
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.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
