Four Days Left To Buy plenum AG (FRA:PLEK) Before The Ex-Dividend Date

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that plenum AG (FRA:PLEK) is about to go ex-dividend in just 4 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 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. Meaning, you will need to purchase plenum's shares before the 10th of July to receive the dividend, which will be paid on the 12th of July.

The company's next dividend payment will be €0.30 per share, and in the last 12 months, the company paid a total of €0.30 per share. Based on the last year's worth of payments, plenum stock has a trailing yield of around 3.6% on the current share price of €8.25. If you buy this business for its dividend, you should have an idea of whether plenum's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.

View our latest analysis for plenum

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. plenum paid out 91% of its earnings, which is more than we're comfortable with, unless there are mitigating circumstances. A useful secondary check can be to evaluate whether plenum generated enough free cash flow to afford its dividend. What's good is that dividends were well covered by free cash flow, with the company paying out 16% of its cash flow last year.

It's good to see that while plenum's dividends were not well covered by profits, at least they are affordable from a cash perspective. Still, if this were to happen repeatedly, we'd be concerned about whether the dividend is sustainable in a downturn.

Click here to see how much of its profit plenum 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. If earnings fall far enough, the company could be forced to cut its dividend. With that in mind, we're encouraged by the steady growth at plenum, with earnings per share up 6.6% on average over the last five years.

Unfortunately plenum has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.

The Bottom Line

Has plenum got what it takes to maintain its dividend payments? Earnings per share have grown modestly, and last year plenum paid out a low percentage of its cash flow. However, its dividend payments were not well covered by profits. Overall we're not hugely bearish on the stock, but there are likely better dividend investments out there.

However if you're still interested in plenum as a potential investment, you should definitely consider some of the risks involved with plenum. For example - plenum has 3 warning signs we think you should be aware of.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com