Desarrollos Especiales de Sistemas de Anclaje, S.A. (BME:DESA) Passed Our Checks, And It's About To Pay A €0.2275185 Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Desarrollos Especiales de Sistemas de Anclaje, S.A. (BME:DESA) is about to trade ex-dividend in the next 4 days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. 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 Desarrollos Especiales de Sistemas de Anclaje's shares before the 5th of June in order to receive the dividend, which the company will pay on the 7th of June.

The company's next dividend payment will be €0.2275185 per share. Last year, in total, the company distributed €1.12 to shareholders. Based on the last year's worth of payments, Desarrollos Especiales de Sistemas de Anclaje stock has a trailing yield of around 6.3% on the current share price of €13.40. If you buy this business for its dividend, you should have an idea of whether Desarrollos Especiales de Sistemas de Anclaje'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 Desarrollos Especiales de Sistemas de Anclaje

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Desarrollos Especiales de Sistemas de Anclaje paid out more than half (71%) of its earnings last year, which is a regular payout ratio for most companies. 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. It distributed 40% of its free cash flow as dividends, a comfortable payout level for most companies.

It's positive to see that Desarrollos Especiales de Sistemas de Anclaje's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

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

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. For this reason, we're glad to see Desarrollos Especiales de Sistemas de Anclaje's earnings per share have risen 12% per annum over the last five years. Desarrollos Especiales de Sistemas de Anclaje has an average payout ratio which suggests a balance between growing earnings and rewarding shareholders. This is a reasonable combination that could hint at some further dividend increases in the future.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past four years, Desarrollos Especiales de Sistemas de Anclaje has increased its dividend at approximately 11% 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 Desarrollos Especiales de Sistemas de Anclaje got what it takes to maintain its dividend payments? We like Desarrollos Especiales de Sistemas de Anclaje's growing earnings per share and the fact that - while its payout ratio is around average - it paid out a lower percentage of its cash flow. Overall we think this is an attractive combination and worthy of further research.

In light of that, while Desarrollos Especiales de Sistemas de Anclaje has an appealing dividend, it's worth knowing the risks involved with this stock. In terms of investment risks, we've identified 2 warning signs with Desarrollos Especiales de Sistemas de Anclaje and understanding them should be part of your investment process.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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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.