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It looks like Fervi S.p.A. (BIT:FVI) is about to go ex-dividend in the next 4 days. You will need to purchase shares before the 4th of May to receive the dividend, which will be paid on the 6th of May.
Fervi's upcoming dividend is €0.21 a share, following on from the last 12 months, when the company distributed a total of €0.21 per share to shareholders. Last year's total dividend payments show that Fervi has a trailing yield of 1.9% on the current share price of €11.3. 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 investigate whether Fervi can afford its dividend, and if the dividend could grow.
Check out our latest analysis for Fervi
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Fervi paid out just 24% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances.
Click here to see how much of its profit Fervi 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 decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. With that in mind, it's good to see earnings have grown 17% on last year.
We do note though, one year is too short a time to be drawing strong conclusions about a company's future growth prospects.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last two years, Fervi has lifted its dividend by approximately 18% a year on average. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.
To Sum It Up
Should investors buy Fervi for the upcoming dividend? Companies like Fervi that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. Overall, Fervi looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
On that note, you'll want to research what risks Fervi is facing. For example, we've found 2 warning signs for Fervi that we recommend you consider before investing in the business.