Is It Worth Considering Swiss Life Holding AG (VTX:SLHN) For Its Upcoming Dividend?

It looks like Swiss Life Holding AG (VTX:SLHN) is about to go ex-dividend in the next 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. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Therefore, if you purchase Swiss Life Holding's shares on or after the 17th of May, you won't be eligible to receive the dividend, when it is paid on the 22nd of May.

The company's next dividend payment will be CHF033.00 per share. Last year, in total, the company distributed CHF33.00 to shareholders. Calculating the last year's worth of payments shows that Swiss Life Holding has a trailing yield of 5.1% on the current share price of CHF0648.80. If you buy this business for its dividend, you should have an idea of whether Swiss Life Holding's dividend is reliable and sustainable. As a result, readers should always check whether Swiss Life Holding has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Swiss Life Holding

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. It paid out 89% of its earnings as dividends last year, which is not unreasonable, but limits reinvestment in the business and leaves the dividend vulnerable to a business downturn. We'd be concerned if earnings began to decline.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

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

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. 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 Swiss Life Holding earnings per share are up 3.5% per annum over the last five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Swiss Life Holding has delivered 20% dividend growth per year on average over the past 10 years. 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.

The Bottom Line

Should investors buy Swiss Life Holding for the upcoming dividend? Swiss Life Holding has been generating some growth in earnings per share while paying out more than half of its earnings to shareholders in the form of dividends. It might be worth researching if the company is reinvesting in growth projects that could grow earnings and dividends in the future, but for now we're on the fence about its dividend prospects.

So if you want to do more digging on Swiss Life Holding, you'll find it worthwhile knowing the risks that this stock faces. Our analysis shows 1 warning sign for Swiss Life Holding and you should be aware of this before buying any 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.