Rosenbauer International AG (VIE:ROS) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

By
Simply Wall St
Published
May 16, 2022
WBAG:ROS
Source: Shutterstock

Rosenbauer International AG (VIE:ROS) is about to trade ex-dividend in the next 3 days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Accordingly, Rosenbauer International investors that purchase the stock on or after the 20th of May will not receive the dividend, which will be paid on the 24th of May.

The company's next dividend payment will be €0.90 per share, and in the last 12 months, the company paid a total of €0.90 per share. Looking at the last 12 months of distributions, Rosenbauer International has a trailing yield of approximately 2.4% on its current stock price of €36.9. If you buy this business for its dividend, you should have an idea of whether Rosenbauer International's dividend is reliable and sustainable. So we need to investigate whether Rosenbauer International can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Rosenbauer International

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. Rosenbauer International paid out just 20% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. The good news is it paid out just 9.5% of its free cash flow in the last year.

It's positive to see that Rosenbauer International's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

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

historic-dividend
WBAG:ROS Historic Dividend May 16th 2022

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 decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. This is why it's a relief to see Rosenbauer International earnings per share are up 5.2% per annum over the last five years. Earnings per share have been growing at a decent rate, and the company is retaining more than three-quarters of its earnings in the business. This is an attractive combination, because when profits are reinvested effectively, growth can compound, with corresponding benefits for earnings and dividends in the future.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Rosenbauer International has seen its dividend decline 2.8% per annum on average over the past 10 years, which is not great to see. Rosenbauer International is a rare case where dividends have been decreasing at the same time as earnings per share have been improving. It's unusual to see, and could point to unstable conditions in the core business, or more rarely an intensified focus on reinvesting profits.

The Bottom Line

Should investors buy Rosenbauer International for the upcoming dividend? Earnings per share have been growing moderately, and Rosenbauer International is paying out less than half its earnings and cash flow as dividends, which is an attractive combination as it suggests the company is investing in growth. We would prefer to see earnings growing faster, but the best dividend stocks over the long term typically combine significant earnings per share growth with a low payout ratio, and Rosenbauer International is halfway there. Rosenbauer International looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. For example - Rosenbauer International has 3 warning signs we think you should be aware of.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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