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Readers hoping to buy Merkur PrivatBank KgaA (ETR:MBK) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is usually set to be one business day 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. 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. Accordingly, Merkur PrivatBank KgaA investors that purchase the stock on or after the 18th of June will not receive the dividend, which will be paid on the 20th of June.
The company's next dividend payment will be €0.50 per share, and in the last 12 months, the company paid a total of €0.50 per share. Calculating the last year's worth of payments shows that Merkur PrivatBank KgaA has a trailing yield of 3.2% on the current share price of €15.80. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to check whether the dividend payments are covered, and if earnings are growing.
Check out our latest analysis for Merkur PrivatBank KgaA
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Merkur PrivatBank KgaA paid out a comfortable 36% of its profit last year.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
Click here to see how much of its profit Merkur PrivatBank KgaA paid out over the last 12 months.
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 fall far enough, the company could be forced to cut its dividend. That's why it's comforting to see Merkur PrivatBank KgaA's earnings have been skyrocketing, up 22% per annum for the past five years.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Merkur PrivatBank KgaA has delivered 9.6% dividend growth per year on average over the past 10 years. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.
To Sum It Up
Is Merkur PrivatBank KgaA worth buying for its dividend? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. Overall, Merkur PrivatBank KgaA looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.