We Wouldn't Be Too Quick To Buy Econocom Group SE (EBR:ECONB) Before It Goes Ex-Dividend

By
Simply Wall St
Published
July 30, 2021
ENXTBR:ECONB
Source: Shutterstock

Econocom Group SE (EBR:ECONB) stock is about to trade ex-dividend in 4 days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order 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. Thus, you can purchase Econocom Group's shares before the 5th of August in order to receive the dividend, which the company will pay on the 9th of August.

The company's upcoming dividend is €0.084 a share, following on from the last 12 months, when the company distributed a total of €0.12 per share to shareholders. Calculating the last year's worth of payments shows that Econocom Group has a trailing yield of 3.3% on the current share price of €3.665. 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! We need to see whether the dividend is covered by earnings and if it's growing.

Check out our latest analysis for Econocom Group

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Econocom Group is paying out an acceptable 56% of its profit, a common payout level among most companies.

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

historic-dividend
ENXTBR:ECONB Historic Dividend July 31st 2021

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That's why it's not ideal to see Econocom Group's earnings per share have been shrinking at 4.4% a year over the previous five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last 10 years, Econocom Group has lifted its dividend by approximately 11% a year on average. Growing the dividend payout ratio while earnings are declining can deliver nice returns for a while, but it's always worth checking for when the company can't increase the payout ratio any more - because then the music stops.

Final Takeaway

Is Econocom Group worth buying for its dividend? We're not overly enthused to see Econocom Group's earnings in retreat at the same time as the company is paying out more than half of its earnings as dividends to shareholders. We think there are likely better opportunities out there.

If you want to look further into Econocom Group, it's worth knowing the risks this business faces. To help with this, we've discovered 2 warning signs for Econocom Group that you should be aware of before investing in their shares.

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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