Three Days Left Until Dätwyler Holding AG (VTX:DAE) Trades Ex-Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Dätwyler Holding AG (VTX:DAE) is about to trade ex-dividend in the next three days. Investors can purchase shares before the 11th of March in order to be eligible for this dividend, which will be paid on the 15th of March.

Dätwyler Holding's next dividend payment will be CHF3.20 per share. Last year, in total, the company distributed CHF3.20 to shareholders. Based on the last year's worth of payments, Dätwyler Holding has a trailing yield of 1.1% on the current stock price of CHF282. 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 check whether the dividend payments are covered, and if earnings are growing.

Check out our latest analysis for Dätwyler Holding

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. Dätwyler Holding paid out a comfortable 46% of its profit last year. 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. It paid out more than half (53%) of its free cash flow in the past year, which is within an average range for most companies.

It's positive to see that Dätwyler Holding'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.

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 fall far enough, the company could be forced to cut its dividend. This is why it's a relief to see Dätwyler Holding earnings per share are up 6.8% per annum over the last five years. Decent historical earnings per share growth suggests Dätwyler Holding has been effectively growing value for shareholders. However, it's now paying out more than half its earnings as dividends. If management lifts the payout ratio further, we'd take this as a tacit signal that the company's growth prospects are slowing.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Dätwyler Holding has delivered an average of 3.8% per year annual increase in its dividend, based on the past 10 years of dividend payments. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

The Bottom Line

Should investors buy Dätwyler Holding for the upcoming dividend? Earnings per share have been growing at a steady rate, and Dätwyler Holding paid out less than half its profits and more than half its free cash flow as dividends over the last year. All things considered, we are not particularly enthused about Dätwyler Holding from a dividend perspective.

Ever wonder what the future holds for Dätwyler Holding? See what the six analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow

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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This article by Simply Wall St is general in nature. 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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