Is It Smart To Buy GIEAG Immobilien AG (MUN:2GI) Before It Goes Ex-Dividend?

GIEAG Immobilien AG (MUN:2GI) is about to trade ex-dividend in the next three days. This means that investors who purchase shares on or after the 23rd of December will not receive the dividend, which will be paid on the 29th of December.

GIEAG Immobilien's next dividend payment will be €0.80 per share, on the back of last year when the company paid a total of €0.80 to shareholders. Based on the last year's worth of payments, GIEAG Immobilien stock has a trailing yield of around 3.8% on the current share price of €21. If you buy this business for its dividend, you should have an idea of whether GIEAG Immobilien's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.

See our latest analysis for GIEAG Immobilien

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. GIEAG Immobilien paid out more than half (54%) of its earnings last year, which is a regular payout ratio for most companies.

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

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings fall far enough, the company could be forced to cut its dividend. That's why it's comforting to see GIEAG Immobilien's earnings have been skyrocketing, up 24% per annum for the past five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the past five years, GIEAG Immobilien has increased its dividend at approximately 11% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

The Bottom Line

Is GIEAG Immobilien an attractive dividend stock, or better left on the shelf? GIEAG Immobilien's growing earnings per share and conservative payout ratios make for a decent combination. We also like that it paid out a lower percentage of its cash flow. Overall, it's hard to get excited about GIEAG Immobilien from a dividend perspective.

While it's tempting to invest in GIEAG Immobilien for the dividends alone, you should always be mindful of the risks involved. We've identified 3 warning signs with GIEAG Immobilien (at least 1 which is potentially serious), and understanding them should be part of your investment process.

We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.

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This article by Simply Wall St is general in nature. 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.
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