Read This Before Considering ADM Hamburg Aktiengesellschaft (FRA:OEL) For Its Upcoming €13.58 Dividend

ADM Hamburg Aktiengesellschaft (FRA:OEL) stock is about to trade ex-dividend in 4 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 of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. Accordingly, ADM Hamburg investors that purchase the stock on or after the 22nd of August will not receive the dividend, which will be paid on the 26th of August.

The company's upcoming dividend is €13.58 a share, following on from the last 12 months, when the company distributed a total of €13.58 per share to shareholders. Based on the last year's worth of payments, ADM Hamburg has a trailing yield of 5.7% on the current stock price of €240.00. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. 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 from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. ADM Hamburg 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. ADM Hamburg paid a dividend despite reporting negative free cash flow over the last twelve months. This may be due to heavy investment in the business, but this is still suboptimal from a dividend sustainability perspective.

View our latest analysis for ADM Hamburg

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

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. This is why it's a relief to see ADM Hamburg earnings per share are up 9.3% per annum over the last five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. ADM Hamburg's dividend payments are effectively flat on where they were five years ago.

To Sum It Up

Is ADM Hamburg an attractive dividend stock, or better left on the shelf? ADM Hamburg has been growing earnings per share at a reasonable rate, but over the last year its dividend was not well covered by earnings. It might be worth researching if the company is reinvesting in growth projects that could grow earnings and dividends in the future, but for now we're on the fence about its dividend prospects.

So if you want to do more digging on ADM Hamburg, you'll find it worthwhile knowing the risks that this stock faces. Every company has risks, and we've spotted 2 warning signs for ADM Hamburg (of which 1 shouldn't be ignored!) you should know about.

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.