Ströer SE & Co. KGaA (ETR:SAX) Goes Ex-Dividend Soon

By
Simply Wall St
Published
September 01, 2021
XTRA:SAX
Source: Shutterstock

Ströer SE & Co. KGaA (ETR:SAX) is about to trade ex-dividend in the next 3 days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Meaning, you will need to purchase Ströer SE KGaA's shares before the 6th of September to receive the dividend, which will be paid on the 8th of September.

The company's next dividend payment will be €2.00 per share, on the back of last year when the company paid a total of €2.00 to shareholders. Looking at the last 12 months of distributions, Ströer SE KGaA has a trailing yield of approximately 2.9% on its current stock price of €69.5. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether Ströer SE KGaA has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Ströer SE KGaA

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. Ströer SE KGaA distributed an unsustainably high 171% of its profit as dividends to shareholders last year. Without more sustainable payment behaviour, the dividend looks precarious. A useful secondary check can be to evaluate whether Ströer SE KGaA generated enough free cash flow to afford its dividend. Fortunately, it paid out only 48% of its free cash flow in the past year.

It's disappointing to see that the dividend was not covered by profits, but cash is more important from a dividend sustainability perspective, and Ströer SE KGaA fortunately did generate enough cash to fund its dividend. If executives were to continue paying more in dividends than the company reported in profits, we'd view this as a warning sign. Very few companies are able to sustainably pay dividends larger than their reported earnings.

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

historic-dividend
XTRA:SAX Historic Dividend September 2nd 2021

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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's not encouraging to see that Ströer SE KGaA's earnings are effectively flat over the past five years. We'd take that over an earnings decline any day, but in the long run, the best dividend stocks all grow their earnings per share.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Ströer SE KGaA has delivered 53% dividend growth per year on average over the past seven years.

The Bottom Line

Is Ströer SE KGaA an attractive dividend stock, or better left on the shelf? Ströer SE KGaA's earnings per share are effectively flat, and it is paying out just 48% of its cash flow but 171% of its income. In summary, it's hard to get excited about Ströer SE KGaA from a dividend perspective.

If you want to look further into Ströer SE KGaA, it's worth knowing the risks this business faces. For example, we've found 2 warning signs for Ströer SE KGaA that we recommend you consider before investing in the business.

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.

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