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Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see DATA MODUL Aktiengesellschaft, Produktion und Vertrieb von elektronischen Systemen (ETR:DAM) is about to trade ex-dividend in the next 3 days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled 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. Accordingly, DATA MODUL Produktion und Vertrieb von elektronischen Systemen investors that purchase the stock on or after the 9th of May will not receive the dividend, which will be paid on the 13th of May.
The company's upcoming dividend is €2.00 a share, following on from the last 12 months, when the company distributed a total of €2.00 per share to shareholders. Looking at the last 12 months of distributions, DATA MODUL Produktion und Vertrieb von elektronischen Systemen has a trailing yield of approximately 5.9% on its current stock price of €34.00. If you buy this business for its dividend, you should have an idea of whether DATA MODUL Produktion und Vertrieb von elektronischen Systemen's dividend is reliable and sustainable. So we need to investigate whether DATA MODUL Produktion und Vertrieb von elektronischen Systemen can afford its dividend, and if the dividend could grow.
View our latest analysis for DATA MODUL Produktion und Vertrieb von elektronischen Systemen
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. DATA MODUL Produktion und Vertrieb von elektronischen Systemen paid out a comfortable 49% of its profit last year. A useful secondary check can be to evaluate whether DATA MODUL Produktion und Vertrieb von elektronischen Systemen generated enough free cash flow to afford its dividend. Luckily it paid out just 2.8% of its free cash flow last year.
It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
Have Earnings And Dividends Been Growing?
Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. If earnings fall far enough, the company could be forced to cut its dividend. With that in mind, we're not enthused to see that DATA MODUL Produktion und Vertrieb von elektronischen Systemen's earnings per share have remained effectively flat over the past five years. We'd take that over an earnings decline any day, but in the long run, the best dividend stocks all grow their earnings per share. Recent growth has not been impressive. However, companies that see their growth slow can often choose to pay out a greater percentage of earnings to shareholders, which could see the dividend continue to rise.