Do These 3 Checks Before Buying CA Immobilien Anlagen AG (VIE:CAI) For Its Upcoming Dividend

CA Immobilien Anlagen AG (VIE:CAI) is about to trade ex-dividend in the next three days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a 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. Therefore, if you purchase CA Immobilien Anlagen's shares on or after the 7th of May, you won't be eligible to receive the dividend, when it is paid on the 13th of May.

The company's upcoming dividend is €0.80 a share, following on from the last 12 months, when the company distributed a total of €0.80 per share to shareholders. Last year's total dividend payments show that CA Immobilien Anlagen has a trailing yield of 2.6% on the current share price of €30.86. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. We need to see whether the dividend is covered by earnings and if it's growing.

Check out our latest analysis for CA Immobilien Anlagen

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. CA Immobilien Anlagen reported a loss last year, so it's not great to see that it has continued paying a dividend. With the recent loss, it's important to check if the business generated enough cash to pay its dividend. If cash earnings don't cover the dividend, the company would have to pay dividends out of cash in the bank, or by borrowing money, neither of which is long-term sustainable. Fortunately, it paid out only 41% of its free cash flow in the past year.

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

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. CA Immobilien Anlagen reported a loss last year, and the general trend suggests its earnings have also been declining in recent years, making us wonder if the dividend is at risk.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. CA Immobilien Anlagen has delivered 7.2% dividend growth per year on average over the past 10 years.

Get our latest analysis on CA Immobilien Anlagen's balance sheet health here.

To Sum It Up

From a dividend perspective, should investors buy or avoid CA Immobilien Anlagen? It's hard to get used to CA Immobilien Anlagen paying a dividend despite reporting a loss over the past year. At least the dividend was covered by free cash flow, however. It's not that we think CA Immobilien Anlagen is a bad company, but these characteristics don't generally lead to outstanding dividend performance.

Although, if you're still interested in CA Immobilien Anlagen and want to know more, you'll find it very useful to know what risks this stock faces. To help with this, we've discovered 2 warning signs for CA Immobilien Anlagen (1 doesn't sit too well with us!) that you ought to be aware of before buying the shares.

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.