Borussia Dortmund GmbH Kommanditgesellschaft auf Aktien (ETR:BVB) Is Due To Pay A Dividend Of €0.06

Borussia Dortmund GmbH & Co. Kommanditgesellschaft auf Aktien's (ETR:BVB) investors are due to receive a payment of €0.06 per share on 27th of November. This makes the dividend yield 1.7%, which will augment investor returns quite nicely.

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Borussia Dortmund GmbH Kommanditgesellschaft auf Aktien's Payment Could Potentially Have Solid Earnings Coverage

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. The last dividend made up quite a large portion of free cash flows, and this was made worse by the lack of free cash flows. Generally, we think that this would be a risky long term practice.

EPS is set to grow by 13.9% over the next year. Assuming the dividend continues along recent trends, our estimates say the payout ratio could reach 88% - on the higher side, but we wouldn't necessarily say this is unsustainable.

See our latest analysis for Borussia Dortmund GmbH Kommanditgesellschaft auf Aktien

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The dividend has gone from an annual total of €0.05 in 2015 to the most recent total annual payment of €0.06. This means that it has been growing its distributions at 1.8% per annum over that time. Modest growth in the dividend is good to see, but we think this is offset by historical cuts to the payments. It is hard to live on a dividend income if the company's earnings are not consistent.

Borussia Dortmund GmbH Kommanditgesellschaft auf Aktien's Dividend Might Lack Growth

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. It's encouraging to see that Borussia Dortmund GmbH Kommanditgesellschaft auf Aktien has been growing its earnings per share at 63% a year over the past five years. Earnings per share is growing nicely, but the company is paying out most of its earnings as dividends. This might be sustainable, but we wonder why Borussia Dortmund GmbH Kommanditgesellschaft auf Aktien is not retaining those earnings to reinvest in growth.

The Dividend Could Prove To Be Unreliable

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. In general, the distributions are a little bit higher than we would like, but we can't ignore the fact the quickly growing earnings gives this stock great potential in the future. Overall, we don't think this company has the makings of a good income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Case in point: We've spotted 3 warning signs for Borussia Dortmund GmbH Kommanditgesellschaft auf Aktien (of which 1 is a bit concerning!) you should know about. Is Borussia Dortmund GmbH Kommanditgesellschaft auf Aktien 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.