Don't Buy SM Wirtschaftsberatungs AG (ETR:SMWN) For Its Next Dividend Without Doing These Checks

It looks like SM Wirtschaftsberatungs AG (ETR:SMWN) is about to go ex-dividend in the next 2 days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the 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. Thus, you can purchase SM Wirtschaftsberatungs' shares before the 15th of August in order to receive the dividend, which the company will pay on the 19th of August.

The company's upcoming dividend is €0.26 a share, following on from the last 12 months, when the company distributed a total of €0.26 per share to shareholders. Calculating the last year's worth of payments shows that SM Wirtschaftsberatungs has a trailing yield of 4.3% on the current share price of €6.00. 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 check whether the dividend payments are covered, and if earnings are growing.

See our latest analysis for SM Wirtschaftsberatungs

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. SM Wirtschaftsberatungs reported a loss after tax last year, which means it's paying a dividend despite being unprofitable. While this might be a one-off event, this is unlikely to be sustainable in the long term.

Click here to see how much of its profit SM Wirtschaftsberatungs paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. SM Wirtschaftsberatungs reported a loss last year, and the general trend suggests its earnings have also been declining in recent years, making us wonder if the dividend is at risk.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. SM Wirtschaftsberatungs's dividend payments are effectively flat on where they were 10 years ago. When earnings are declining yet the dividends are flat, typically the company is either paying out a higher portion of its earnings, or paying out of cash or debt on the balance sheet, neither of which is ideal.

We update our analysis on SM Wirtschaftsberatungs every 24 hours, so you can always get the latest insights on its financial health, here.

The Bottom Line

Should investors buy SM Wirtschaftsberatungs for the upcoming dividend? This is not an overtly appealing combination of characteristics, and we're just not that interested in this company's dividend.

Although, if you're still interested in SM Wirtschaftsberatungs and want to know more, you'll find it very useful to know what risks this stock faces. Every company has risks, and we've spotted 4 warning signs for SM Wirtschaftsberatungs (of which 2 can't be ignored!) you should know about.

If you're in the market for strong dividend payers, we recommend checking 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.