Stock Analysis

Wüstenrot & Württembergische (ETR:WUW) Will Pay A Dividend Of €0.65

XTRA:WUW
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Wüstenrot & Württembergische AG's (ETR:WUW) investors are due to receive a payment of €0.65 per share on 30th of May. This payment means the dividend yield will be 3.7%, which is below the average for the industry.

View our latest analysis for Wüstenrot & Württembergische

Wüstenrot & Württembergische's Payment Has Solid Earnings Coverage

If it is predictable over a long period, even low dividend yields can be attractive. Wüstenrot & Württembergische is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. 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. Assuming the dividend continues along recent trends, we believe the payout ratio could be 26%, which we are pretty comfortable with and we think is feasible on an earnings basis.

historic-dividend
XTRA:WUW Historic Dividend April 28th 2022

Wüstenrot & Württembergische Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2012, the dividend has gone from €0.50 to €0.65. This works out to be a compound annual growth rate (CAGR) of approximately 2.7% a year over that time. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.

The Dividend Has Growth Potential

Investors could be attracted to the stock based on the quality of its payment history. Wüstenrot & Württembergische has seen EPS rising for the last five years, at 8.5% per annum. Wüstenrot & Württembergische definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Our Thoughts On Wüstenrot & Württembergische's Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Wüstenrot & Württembergische's payments, as there could be some issues with sustaining them into the future. While Wüstenrot & Württembergische is earning enough to cover the payments, the cash flows are lacking. We would probably look elsewhere for an income investment.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Just as an example, we've come across 3 warning signs for Wüstenrot & Württembergische you should be aware of, and 2 of them are a bit concerning. If you are a dividend investor, you might also want to look at our curated list of high yield 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.