Stock Analysis

Wüstenrot & Württembergische (ETR:WUW) Is Due To Pay A Dividend Of €0.65

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The board of Wüstenrot & Württembergische AG (ETR:WUW) has announced that it will pay a dividend on the 30th of May, with investors receiving €0.65 per share. The dividend yield is 3.5% based on this payment, which is a little bit low compared to the other companies in the industry.

See our latest analysis for Wüstenrot & Württembergische

Wüstenrot & Württembergische's Earnings Easily Cover the Distributions

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. Prior to this announcement, Wüstenrot & Württembergische's earnings easily covered the dividend, but free cash flows were negative. We think that cash flows should take priority over earnings, so this is definitely a worry for the dividend going forward.

EPS is set to fall by 31.0% over the next 12 months. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 16%, which is comfortable for the company to continue in the future.

XTRA:WUW Historic Dividend April 3rd 2022

Wüstenrot & Württembergische Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The first annual payment during the last 10 years was €0.50 in 2012, and the most recent fiscal year payment was €0.65. This implies that the company grew its distributions at a yearly rate of about 2.7% over that duration. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see Wüstenrot & Württembergische has been growing its earnings per share at 19% a year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

Our Thoughts On Wüstenrot & Württembergische's Dividend

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. While the low payout ratio is redeeming feature, this is offset by the minimal cash to cover the payments. We would probably look elsewhere for an income investment.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've identified 2 warning signs for Wüstenrot & Württembergische (1 shouldn't be ignored!) that you should be aware of before investing. Is Wüstenrot & Württembergische not quite the opportunity you were looking for? Why not check out 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.