AGRANA Beteiligungs-Aktiengesellschaft (VIE:AGR) Could Be A Buy For Its Upcoming Dividend

It looks like AGRANA Beteiligungs-Aktiengesellschaft (VIE:AGR) is about to go ex-dividend in the next four days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. In other words, investors can purchase AGRANA Beteiligungs-Aktiengesellschaft's shares before the 10th of July in order to be eligible for the dividend, which will be paid on the 15th of July.

The company's next dividend payment will be €0.90 per share. Last year, in total, the company distributed €0.90 to shareholders. Last year's total dividend payments show that AGRANA Beteiligungs-Aktiengesellschaft has a trailing yield of 6.5% on the current share price of €13.95. If you buy this business for its dividend, you should have an idea of whether AGRANA Beteiligungs-Aktiengesellschaft's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.

Check out our latest analysis for AGRANA Beteiligungs-Aktiengesellschaft

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Its dividend payout ratio is 87% 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. It could become a concern if earnings started to decline. 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. Thankfully its dividend payments took up just 44% of the free cash flow it generated, which is a comfortable payout ratio.

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 AGRANA Beteiligungs-Aktiengesellschaft 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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That's why it's comforting to see AGRANA Beteiligungs-Aktiengesellschaft's earnings have been skyrocketing, up 21% per annum for the past five years. The company is paying out more than three-quarters of its earnings, but it is also generating strong earnings growth.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. AGRANA Beteiligungs-Aktiengesellschaft's dividend payments are effectively flat on where they were 10 years ago.

Final Takeaway

Is AGRANA Beteiligungs-Aktiengesellschaft an attractive dividend stock, or better left on the shelf? We like AGRANA Beteiligungs-Aktiengesellschaft's growing earnings per share and the fact that - while its payout ratio is around average - it paid out a lower percentage of its cash flow. Overall we think this is an attractive combination and worthy of further research.

On that note, you'll want to research what risks AGRANA Beteiligungs-Aktiengesellschaft is facing. Our analysis shows 2 warning signs for AGRANA Beteiligungs-Aktiengesellschaft and you should be aware of them before buying any shares.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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