Swiss Re AG (VTX:SREN) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Swiss Re AG (VTX:SREN) is about to trade ex-dividend in the next 4 days. The ex-dividend date is usually set to be two business days before the record date, which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the 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. This means that investors who purchase Swiss Re's shares on or after the 15th of April will not receive the dividend, which will be paid on the 17th of April.

The company's next dividend payment will be US$7.35 per share. Last year, in total, the company distributed US$7.35 to shareholders. Looking at the last 12 months of distributions, Swiss Re has a trailing yield of approximately 4.8% on its current stock price of CHF0130.70. 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.

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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. Swiss Re paid out more than half (68%) of its earnings last year, which is a regular payout ratio for most companies.

When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.

Check out our latest analysis for Swiss Re

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

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. It's encouraging to see Swiss Re has grown its earnings rapidly, up 34% a year for the past five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Swiss Re's dividend payments are effectively flat on where they were 10 years ago.

Final Takeaway

Is Swiss Re an attractive dividend stock, or better left on the shelf? Earnings per share are growing nicely, and Swiss Re is paying out a percentage of its earnings that is around the average for dividend-paying stocks. Swiss Re ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.

While it's tempting to invest in Swiss Re for the dividends alone, you should always be mindful of the risks involved. In terms of investment risks, we've identified 1 warning sign with Swiss Re and understanding them should be part of your investment process.

If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.

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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.