Four Days Left To Buy Siemens Healthineers AG (ETR:SHL) Before The Ex-Dividend Date

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Siemens Healthineers AG (ETR:SHL) is about to go ex-dividend in just 4 days. You can purchase shares before the 15th of February in order to receive the dividend, which the company will pay on the 17th of February.

Siemens Healthineers'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. Based on the last year's worth of payments, Siemens Healthineers has a trailing yield of 1.6% on the current stock price of €48.65. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to investigate whether Siemens Healthineers can afford its dividend, and if the dividend could grow.

View our latest analysis for Siemens Healthineers

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. Siemens Healthineers is paying out an acceptable 57% of its profit, a common payout level among most companies. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. Over the last year it paid out 58% of its free cash flow as dividends, within the usual range for most companies.

It's positive to see that Siemens Healthineers's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. With that in mind, we're not enthused to see that Siemens Healthineers's earnings per share have remained effectively flat over the past five years. Better than seeing them fall off a cliff, for sure, but the best dividend stocks grow their earnings meaningfully over the long run. Earnings growth has been slim and the company is paying out more than half of its earnings. While there is some room to both increase the payout ratio and reinvest in the business, generally the higher a payout ratio goes, the lower a company's prospects for future growth.

Siemens Healthineers also issued more than 5% of its market cap in new stock during the past year, which we feel is likely to hurt its dividend prospects in the long run. It's hard to grow dividends per share when a company keeps creating new shares.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past two years, Siemens Healthineers has increased its dividend at approximately 6.9% a year on average.

The Bottom Line

Is Siemens Healthineers an attractive dividend stock, or better left on the shelf? Earnings per share have barely grown, and although Siemens Healthineers paid out over half its earnings and free cash flow last year, the payout ratios are within a normal range for most companies. To summarise, Siemens Healthineers looks okay on this analysis, although it doesn't appear a stand-out opportunity.

So if you want to do more digging on Siemens Healthineers, you'll find it worthwhile knowing the risks that this stock faces. Case in point: We've spotted 3 warning signs for Siemens Healthineers you should be aware of.

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.

When trading Siemens Healthineers or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

This article by Simply Wall St is general in nature. 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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.