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Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that FCR Immobilien AG (ETR:FC9) is about to go ex-dividend in just three days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order 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 FCR Immobilien's shares on or after the 25th 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 €0.25 per share. Last year, in total, the company distributed €0.25 to shareholders. Based on the last year's worth of payments, FCR Immobilien stock has a trailing yield of around 2.6% on the current share price of €9.80. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
See our latest analysis for FCR Immobilien
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. That's why it's good to see FCR Immobilien paying out a modest 28% of its earnings. A useful secondary check can be to evaluate whether FCR Immobilien generated enough free cash flow to afford its dividend. It paid out 8.9% of its free cash flow as dividends last year, which is conservatively low.
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.
Click here to see how much of its profit FCR Immobilien 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 earnings fall far enough, the company could be forced to cut its dividend. With that in mind, we're encouraged by the steady growth at FCR Immobilien, with earnings per share up 4.7% on average over the last five years. Recent earnings growth has been limited. Yet there are several ways to grow the dividend, and one of them is simply that the company may choose to pay out more of its earnings as dividends.