Be Sure To Check Out DATAGROUP SE (ETR:D6H) Before It Goes Ex-Dividend

Readers hoping to buy DATAGROUP SE (ETR:D6H) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Meaning, you will need to purchase DATAGROUP's shares before the 15th of March to receive the dividend, which will be paid on the 19th of March.

The company's upcoming dividend is €1.50 a share, following on from the last 12 months, when the company distributed a total of €1.50 per share to shareholders. Last year's total dividend payments show that DATAGROUP has a trailing yield of 3.4% on the current share price of €44.15. If you buy this business for its dividend, you should have an idea of whether DATAGROUP's dividend is reliable and sustainable. So we need to investigate whether DATAGROUP can afford its dividend, and if the dividend could grow.

View our latest analysis for DATAGROUP

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. Fortunately DATAGROUP's payout ratio is modest, at just 47% of profit. A useful secondary check can be to evaluate whether DATAGROUP generated enough free cash flow to afford its dividend. Thankfully its dividend payments took up just 34% of the free cash flow it generated, which is a comfortable payout ratio.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

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

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. Fortunately for readers, DATAGROUP's earnings per share have been growing at 16% a year for the past five years. Earnings per share are growing rapidly and the company is keeping more than half of its earnings within the business; an attractive combination which could suggest the company is focused on reinvesting to grow earnings further. Fast-growing businesses that are reinvesting heavily are enticing from a dividend perspective, especially since they can often increase the payout ratio later.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. DATAGROUP has delivered 22% dividend growth per year on average over the past 10 years. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

To Sum It Up

Is DATAGROUP an attractive dividend stock, or better left on the shelf? DATAGROUP has grown its earnings per share while simultaneously reinvesting in the business. Unfortunately it's cut the dividend at least once in the past 10 years, but the conservative payout ratio makes the current dividend look sustainable. DATAGROUP looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

While it's tempting to invest in DATAGROUP for the dividends alone, you should always be mindful of the risks involved. Every company has risks, and we've spotted 2 warning signs for DATAGROUP you should know about.

A common investing mistake is buying the first interesting stock you see. Here you can find a full 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.