Yahoo Finance We Wouldn't Be Too Quick To Buy DMG MORI AKTIENGESELLSCHAFT (ETR:GIL) Before It Goes Ex-Dividend
Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that DMG MORI AKTIENGESELLSCHAFT (ETR:GIL) is about to go ex-dividend in just 3 days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order 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. Thus, you can purchase DMG MORI's shares before the 2nd of May in order to receive the dividend, which the company will pay on the 6th of May.
The company's upcoming dividend is €1.03 a share, following on from the last 12 months, when the company distributed a total of €1.17 per share to shareholders. Looking at the last 12 months of distributions, DMG MORI has a trailing yield of approximately 2.6% on its current stock price of €44.20. 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 DMG MORI can afford its dividend, and if the dividend could grow.
Check out our latest analysis for DMG MORI
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. DMG MORI paid out 60% of its earnings to investors last year, a normal payout level for most businesses.
Click here to see how much of its profit DMG MORI paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
When earnings decline, dividend companies become much harder to analyse and own safely. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Readers will understand then, why we're concerned to see DMG MORI's earnings per share have dropped 15% a year over the past five years. When earnings per share fall, the maximum amount of dividends that can be paid also falls.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. DMG MORI has delivered an average of 8.9% per year annual increase in its dividend, based on the past 10 years of dividend payments. That's interesting, but the combination of a growing dividend despite declining earnings can typically only be achieved by paying out more of the company's profits. This can be valuable for shareholders, but it can't go on forever.
The Bottom Line
From a dividend perspective, should investors buy or avoid DMG MORI? Earnings per share have been declining and the company is paying out more than half its profits to shareholders; not an enticing combination. It doesn't appear an outstanding opportunity, but could be worth a closer look.
If you're not too concerned about DMG MORI's ability to pay dividends, you should still be mindful of some of the other risks that this business faces. Every company has risks, and we've spotted 4 warning signs for DMG MORI (of which 1 is significant!) 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.
