Here's What We Like About Schwälbchen Molkerei Jakob Berz's (FRA:SMB) Upcoming Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Schwälbchen Molkerei Jakob Berz AG (FRA:SMB) is about to trade ex-dividend in the next three 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. 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. Accordingly, Schwälbchen Molkerei Jakob Berz investors that purchase the stock on or after the 28th of April will not receive the dividend, which will be paid on the 30th of April.

The company's next dividend payment will be €0.80 per share, and in the last 12 months, the company paid a total of €0.80 per share. Looking at the last 12 months of distributions, Schwälbchen Molkerei Jakob Berz has a trailing yield of approximately 1.4% on its current stock price of €58.00. 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 investigate whether Schwälbchen Molkerei Jakob Berz can afford its dividend, and if the dividend could grow.

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Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Schwälbchen Molkerei Jakob Berz is paying out just 15% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events.

View our latest analysis for Schwälbchen Molkerei Jakob Berz

Click here to see how much of its profit Schwälbchen Molkerei Jakob Berz paid out over the last 12 months.

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 we're optimistic about Schwälbchen Molkerei Jakob Berz's earnings, which have ripped higher, up 22% over the past year. While we'd be remiss not to point out that a year is a very short time in dividend investing, it's an encouraging sign so far.

One year is a very short time frame in the pantheon of investing, so we wouldn't get too hung up on these numbers.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, 10 years ago, Schwälbchen Molkerei Jakob Berz has lifted its dividend by approximately 2.9% a year on average. It's good to see both earnings and the dividend have improved - although the former has been rising much quicker than the latter, possibly due to the company reinvesting more of its profits in growth.

To Sum It Up

Has Schwälbchen Molkerei Jakob Berz got what it takes to maintain its dividend payments? Companies like Schwälbchen Molkerei Jakob Berz that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. 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 Schwälbchen Molkerei Jakob Berz more closely.

On that note, you'll want to research what risks Schwälbchen Molkerei Jakob Berz is facing. Case in point: We've spotted 2 warning signs for Schwälbchen Molkerei Jakob Berz you should be aware of.

If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.

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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.