Here's What We Like About Tradegate Wertpapierhandelsbank's (FRA:T2G) Upcoming Dividend

By
Simply Wall St
Published
June 06, 2021
DB:T2G
Source: Shutterstock

Tradegate AG Wertpapierhandelsbank (FRA:T2G) is about to trade ex-dividend in the next 3 days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled 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. This means that investors who purchase Tradegate Wertpapierhandelsbank's shares 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 €1.80 per share. Last year, in total, the company distributed €1.80 to shareholders. Looking at the last 12 months of distributions, Tradegate Wertpapierhandelsbank has a trailing yield of approximately 1.5% on its current stock price of €123. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether Tradegate Wertpapierhandelsbank has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Tradegate Wertpapierhandelsbank

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. That's why it's good to see Tradegate Wertpapierhandelsbank paying out a modest 35% of its earnings.

Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.

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

historic-dividend
DB:T2G Historic Dividend June 7th 2021

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings fall far enough, the company could be forced to cut its dividend. That's why it's comforting to see Tradegate Wertpapierhandelsbank's earnings have been skyrocketing, up 59% per annum 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. Tradegate Wertpapierhandelsbank has delivered an average of 37% per year annual increase in its dividend, based on the past 10 years of dividend payments. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

The Bottom Line

From a dividend perspective, should investors buy or avoid Tradegate Wertpapierhandelsbank? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. We think this is a pretty attractive combination, and would be interested in investigating Tradegate Wertpapierhandelsbank more closely.

On that note, you'll want to research what risks Tradegate Wertpapierhandelsbank is facing. In terms of investment risks, we've identified 2 warning signs with Tradegate Wertpapierhandelsbank and understanding them should be part of your investment process.

If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.

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