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Hapag-Lloyd Aktiengesellschaft (ETR:HLAG) is about to trade ex-dividend in the next 4 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. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. In other words, investors can purchase Hapag-Lloyd's shares before the 2nd of May in order to be eligible for the dividend, which will be paid on the 6th of May.
The company's next dividend payment will be €8.20 per share, on the back of last year when the company paid a total of €8.20 to shareholders. Looking at the last 12 months of distributions, Hapag-Lloyd has a trailing yield of approximately 6.0% on its current stock price of €137.50. If you buy this business for its dividend, you should have an idea of whether Hapag-Lloyd's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.
We've discovered 2 warning signs about Hapag-Lloyd. View them for free.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Hapag-Lloyd is paying out an acceptable 60% of its profit, a common payout level among most companies. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Dividends consumed 75% of the company's free cash flow last year, which is within a normal range for most dividend-paying organisations.
It's positive to see that Hapag-Lloyd'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.
View our latest analysis for Hapag-Lloyd
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That's why it's comforting to see Hapag-Lloyd's earnings have been skyrocketing, up 46% per annum for the past five years. The current payout ratio suggests a good balance between rewarding shareholders with dividends, and reinvesting in growth. With a reasonable payout ratio, profits being reinvested, and some earnings growth, Hapag-Lloyd could have strong prospects for future increases to the dividend.