IVU Traffic Technologies AG (ETR:IVU) Will Pay A €0.24 Dividend In Four Days

Readers hoping to buy IVU Traffic Technologies AG (ETR:IVU) 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 as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Thus, you can purchase IVU Traffic Technologies' shares before the 26th of May in order to receive the dividend, which the company will pay on the 30th of May.

The company's next dividend payment will be €0.24 per share, and in the last 12 months, the company paid a total of €0.24 per share. Calculating the last year's worth of payments shows that IVU Traffic Technologies has a trailing yield of 1.5% on the current share price of €16.18. If you buy this business for its dividend, you should have an idea of whether IVU Traffic Technologies's dividend is reliable and sustainable. As a result, readers should always check whether IVU Traffic Technologies has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for IVU Traffic Technologies

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. That's why it's good to see IVU Traffic Technologies paying out a modest 41% of its earnings. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. IVU Traffic Technologies paid out more free cash flow than it generated - 151%, to be precise - last year, which we think is concerningly high. It's hard to consistently pay out more cash than you generate without either borrowing or using company cash, so we'd wonder how the company justifies this payout level.

IVU Traffic Technologies paid out less in dividends than it reported in profits, but unfortunately it didn't generate enough cash to cover the dividend. Cash is king, as they say, and were IVU Traffic Technologies to repeatedly pay dividends that aren't well covered by cashflow, we would consider this a warning sign.

Click here to see how much of its profit IVU Traffic Technologies paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Fortunately for readers, IVU Traffic Technologies's earnings per share have been growing at 16% a year for the past five years. Earnings have been growing at a decent rate, but we're concerned dividend payments consumed most of the company's cash flow over the past year.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Since the start of our data, eight years ago, IVU Traffic Technologies has lifted its dividend by approximately 22% a year on average. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

Final Takeaway

Has IVU Traffic Technologies got what it takes to maintain its dividend payments? We like that IVU Traffic Technologies has been successfully growing its earnings per share at a nice rate and reinvesting most of its profits in the business. However, we note the high cashflow payout ratio with some concern. All things considered, we are not particularly enthused about IVU Traffic Technologies from a dividend perspective.

Want to learn more about IVU Traffic Technologies's dividend performance? Check out this visualisation of its historical revenue and earnings growth.

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.