Don't Race Out To Buy Pilkington Deutschland AG (HMSE:FDD) Just Because It's Going Ex-Dividend

Pilkington Deutschland AG (HMSE:FDD) stock is about to trade ex-dividend in 4 days. Typically, the ex-dividend date is two business days before the record date, which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Accordingly, Pilkington Deutschland investors that purchase the stock on or after the 14th of November will not receive the dividend, which will be paid on the 18th of November.

The company's next dividend payment will be €19.30 per share, on the back of last year when the company paid a total of €19.30 to shareholders. Calculating the last year's worth of payments shows that Pilkington Deutschland has a trailing yield of 7.7% on the current share price of €250.00. If you buy this business for its dividend, you should have an idea of whether Pilkington Deutschland's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

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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. Pilkington Deutschland reported a loss after tax last year, which means it's paying a dividend despite being unprofitable. While this might be a one-off event, this is unlikely to be sustainable in the long term.

See our latest analysis for Pilkington Deutschland

Click here to see how much of its profit Pilkington Deutschland paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If earnings fall far enough, the company could be forced to cut its dividend. Pilkington Deutschland reported a loss last year, and the general trend suggests its earnings have also been declining in recent years, making us wonder if the dividend is at risk.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Pilkington Deutschland's dividend payments are effectively flat on where they were four years ago. When earnings are declining yet the dividends are flat, typically the company is either paying out a higher portion of its earnings, or paying out of cash or debt on the balance sheet, neither of which is ideal.

Get our latest analysis on Pilkington Deutschland's balance sheet health here.

The Bottom Line

Is Pilkington Deutschland an attractive dividend stock, or better left on the shelf? These characteristics don't generally lead to outstanding dividend performance, and investors may not be happy with the results of owning this stock for its dividend.

With that in mind though, if the poor dividend characteristics of Pilkington Deutschland don't faze you, it's worth being mindful of the risks involved with this business. Case in point: We've spotted 1 warning sign for Pilkington Deutschland you should be aware of.

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.