Mobimo Holding AG (VTX:MOBN) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

Mobimo Holding AG (VTX:MOBN) is about to trade 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. Meaning, you will need to purchase Mobimo Holding's shares before the 13th of April to receive the dividend, which will be paid on the 17th of April.

The company's next dividend payment will be CHF10.00 per share, which looks like a nice increase on last year, when the company distributed a total of CHF5.00 to shareholders. If you buy this business for its dividend, you should have an idea of whether Mobimo Holding's dividend is reliable and sustainable. So we need to investigate whether Mobimo Holding can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Mobimo 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. That's why it's good to see Mobimo Holding paying out a modest 26% of its earnings. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Fortunately, it paid out only 38% of its free cash flow in the past year.

It's positive to see that Mobimo 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?

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 earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. With that in mind, we're encouraged by the steady growth at Mobimo Holding, with earnings per share up 4.8% on average over the last five years. Recent earnings growth has been limited. Yet there are several ways to grow the dividend, and one of them is simply that the company may choose to pay out more of its earnings as dividends.

We'd also point out that Mobimo Holding issued a meaningful number of new shares in the past year. It's hard to grow dividends per share when a company keeps creating new shares.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Mobimo Holding has seen its dividend decline 5.7% per annum on average over the past 10 years, which is not great to see. It's unusual to see earnings per share increasing at the same time as dividends per share have been in decline. We'd hope it's because the company is reinvesting heavily in its business, but it could also suggest business is lumpy.

The Bottom Line

Is Mobimo Holding worth buying for its dividend? Earnings per share have been growing moderately, and Mobimo Holding is paying out less than half its earnings and cash flow as dividends, which is an attractive combination as it suggests the company is investing in growth. We would prefer to see earnings growing faster, but the best dividend stocks over the long term typically combine significant earnings per share growth with a low payout ratio, and Mobimo Holding is halfway there. Overall we think this is an attractive combination and worthy of further research.

So while Mobimo Holding looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. Be aware that Mobimo Holding is showing 5 warning signs in our investment analysis, and 2 of those don't sit too well with us...

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield 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.