Just Four Days Till AMAG Austria Metall AG (VIE:AMAG) Will Be Trading Ex-Dividend

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 AMAG Austria Metall AG (VIE:AMAG) is about to go ex-dividend in just four 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 of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. In other words, investors can purchase AMAG Austria Metall's shares before the 16th of April in order to be eligible for the dividend, which will be paid on the 18th of April.

The company's next dividend payment will be €1.50 per share, and in the last 12 months, the company paid a total of €1.50 per share. Based on the last year's worth of payments, AMAG Austria Metall stock has a trailing yield of around 5.6% on the current share price of €27.00. 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! So we need to investigate whether AMAG Austria Metall can afford its dividend, and if the dividend could grow.

Check out our latest analysis for AMAG Austria Metall

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. Its dividend payout ratio is 80% 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 concerned if earnings began to decline. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. It paid out more than half (63%) of its free cash flow in the past year, which is within an average range for most companies.

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 AMAG Austria Metall 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. This is why it's a relief to see AMAG Austria Metall earnings per share are up 8.3% per annum over the last five years. Decent historical earnings per share growth suggests AMAG Austria Metall has been effectively growing value for shareholders. However, it's now paying out more than half its earnings as dividends. Therefore it's unlikely that the company will be able to reinvest heavily in its business, which could presage slower growth in the future.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. AMAG Austria Metall has delivered an average of 9.6% per year annual increase in its dividend, based on the past 10 years of dividend payments. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

Final Takeaway

Has AMAG Austria Metall got what it takes to maintain its dividend payments? Earnings per share have been growing modestly and AMAG Austria Metall paid out a bit over half of its earnings and free cash flow last year. In summary, it's hard to get excited about AMAG Austria Metall from a dividend perspective.

With that being said, if dividends aren't your biggest concern with AMAG Austria Metall, you should know about the other risks facing this business. For example, we've found 2 warning signs for AMAG Austria Metall that we recommend you consider before investing in the business.

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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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.