Berliner Effektengesellschaft AG (FRA:BFV) Looks Interesting, And It's About To Pay A Dividend

By
Simply Wall St
Published
June 05, 2021
DB:BFV
Source: Shutterstock

Readers hoping to buy Berliner Effektengesellschaft AG (FRA:BFV) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is usually set to be one business day 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 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, Berliner Effektengesellschaft investors that purchase the stock on or after the 11th of June will not receive the dividend, which will be paid on the 15th of June.

The company's next dividend payment will be €1.00 per share. Last year, in total, the company distributed €1.00 to shareholders. Calculating the last year's worth of payments shows that Berliner Effektengesellschaft has a trailing yield of 1.1% on the current share price of €88.2. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Berliner Effektengesellschaft has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Berliner Effektengesellschaft

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. Berliner Effektengesellschaft is paying out just 17% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events.

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.

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

historic-dividend
DB:BFV Historic Dividend June 6th 2021

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. It's encouraging to see Berliner Effektengesellschaft has grown its earnings rapidly, up 45% a year for the past five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last 10 years, Berliner Effektengesellschaft has lifted its dividend by approximately 21% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

Final Takeaway

Has Berliner Effektengesellschaft got what it takes to maintain its dividend payments? When companies are growing rapidly and retaining a majority of the profits within the business, it's usually a sign that reinvesting earnings creates more value than paying dividends to shareholders. This strategy can add significant value to shareholders over the long term - as long as it's done without issuing too many new shares. We think this is a pretty attractive combination, and would be interested in investigating Berliner Effektengesellschaft more closely.

In light of that, while Berliner Effektengesellschaft has an appealing dividend, it's worth knowing the risks involved with this stock. Case in point: We've spotted 1 warning sign for Berliner Effektengesellschaft you should be aware of.

We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.

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