Don't Race Out To Buy DLB-Anlageservice AG (BST:DLB) Just Because It's Going Ex-Dividend

DLB-Anlageservice AG (BST:DLB) is about to trade ex-dividend in the next four 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 DLB-Anlageservice's shares on or after the 14th of May will not receive the dividend, which will be paid on the 16th of May.

The company's next dividend payment will be €0.60 per share, and in the last 12 months, the company paid a total of €0.60 per share. Calculating the last year's worth of payments shows that DLB-Anlageservice has a trailing yield of 4.0% on the current share price of €15.00. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to check whether the dividend payments are covered, and if earnings are growing.

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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. DLB-Anlageservice distributed an unsustainably high 132% of its profit as dividends to shareholders last year. Without extenuating circumstances, we'd consider the dividend at risk of a cut.

Generally, the higher a company's payout ratio, the more the dividend is at risk of being reduced.

View our latest analysis for DLB-Anlageservice

Click here to see how much of its profit DLB-Anlageservice paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If earnings fall far enough, the company could be forced to cut its dividend. As a result, it's definitely disappointing to see that earnings per share have declined 13% over the past year.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. DLB-Anlageservice has seen its dividend decline 1.5% per annum on average over the past 10 years, which is not great to see.

The Bottom Line

Is DLB-Anlageservice worth buying for its dividend? Earnings per share are in decline and DLB-Anlageservice is paying out what we feel is an uncomfortably high percentage of its profit as dividends. Generally we think dividend investors should avoid businesses in this situation, as high payout ratios and declining earnings can lead to the dividend being cut. This is not an overtly appealing combination of characteristics, and we're just not that interested in this company's dividend.

Having said that, if you're looking at this stock without much concern for the dividend, you should still be familiar of the risks involved with DLB-Anlageservice. Our analysis shows 6 warning signs for DLB-Anlageservice that we strongly recommend you have a look at before investing in the company.

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.