BAWAG Group (VIE:BG) Could Be A Buy For Its Upcoming Dividend

BAWAG Group AG (VIE:BG) stock is about to trade ex-dividend in 4 days. If you purchase the stock on or after the 10th of March, you won't be eligible to receive this dividend, when it is paid on the 12th of March.

BAWAG Group's next dividend payment will be €0.46 per share. Last year, in total, the company distributed €2.61 to shareholders. Based on the last year's worth of payments, BAWAG Group has a trailing yield of 6.1% on the current stock price of €42.96. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! As a result, readers should always check whether BAWAG Group has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for BAWAG Group

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Its dividend payout ratio is 82% of profit, which means the company is paying out a majority of its earnings. The relatively limited profit reinvestment could slow the rate of future earnings growth. We'd be worried about the risk of a drop in earnings.

When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Fortunately for readers, BAWAG Group's earnings per share have been growing at 15% a year for the past five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the past three years, BAWAG Group has increased its dividend at approximately 65% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

To Sum It Up

Has BAWAG Group got what it takes to maintain its dividend payments? Earnings per share are growing at an attractive rate, and BAWAG Group is paying out a bit over half its profits. In summary, BAWAG Group appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

On that note, you'll want to research what risks BAWAG Group is facing. For example, we've found 1 warning sign for BAWAG Group that we recommend you consider before investing in the business.

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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