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DATAGROUP SE (ETR:D6H) is about to trade ex-dividend in the next three days. The ex-dividend date is usually set to be two business days before the record date, which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the 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. Accordingly, DATAGROUP investors that purchase the stock on or after the 19th of March will not receive the dividend, which will be paid on the 21st of March.
The company's next dividend payment will be €1.00 per share, and in the last 12 months, the company paid a total of €1.00 per share. Based on the last year's worth of payments, DATAGROUP has a trailing yield of 2.3% on the current stock price of €43.00. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to investigate whether DATAGROUP can afford its dividend, and if the dividend could grow.
Check out our latest analysis for DATAGROUP
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. DATAGROUP paid out a comfortable 32% of its profit last year. A useful secondary check can be to evaluate whether DATAGROUP generated enough free cash flow to afford its dividend. Fortunately, it paid out only 49% of its free cash flow in the past year.
It's positive to see that DATAGROUP's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.
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. Fortunately for readers, DATAGROUP's earnings per share have been growing at 11% a year for the past five years. The company has managed to grow earnings at a rapid rate, while reinvesting most of the profits within the business. Fast-growing businesses that are reinvesting heavily are enticing from a dividend perspective, especially since they can often increase the payout ratio later.