Lang & Schwarz Aktiengesellschaft (ETR:LUS1) is about to trade ex-dividend in the next four days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Therefore, if you purchase Lang & Schwarz's shares on or after the 23rd of June, you won't be eligible to receive the dividend, when it is paid on the 27th of June.
The company's next dividend payment will be €0.64 per share, and in the last 12 months, the company paid a total of €0.64 per share. Looking at the last 12 months of distributions, Lang & Schwarz has a trailing yield of approximately 6.1% on its current stock price of €10.45. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. We need to see whether the dividend is covered by earnings and if it's growing.
View our latest analysis for Lang & Schwarz
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Lang & Schwarz paid out more than half (69%) of its earnings last year, which is a regular payout ratio for most companies.
Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.
Click here to see how much of its profit Lang & Schwarz paid out over the last 12 months.
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. This is why it's a relief to see Lang & Schwarz earnings per share are up 2.2% per annum over the last five years.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Lang & Schwarz has delivered an average of 24% per year annual increase in its dividend, based on the past nine years of dividend payments. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.