Is It Smart To Buy Desarrollos Especiales de Sistemas de Anclaje, S.A. (BME:DESA) Before It Goes Ex-Dividend?

Desarrollos Especiales de Sistemas de Anclaje, S.A. (BME:DESA) stock is about to trade ex-dividend in four days. The ex-dividend date is commonly two business days 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 at least 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 26th of March in order to receive the dividend, which the company will pay on the 28th of March.

The company's upcoming dividend is €0.2275376 a share, following on from the last 12 months, when the company distributed a total of €1.12 per share to shareholders. Based on the last year's worth of payments, Desarrollos Especiales de Sistemas de Anclaje stock has a trailing yield of around 7.2% on the current share price of €15.60. 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. So we need to check whether the dividend payments are covered, and if earnings are growing.

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 a comfortable 42% of its profit last year. A useful secondary check can be to evaluate whether Desarrollos Especiales de Sistemas de Anclaje generated enough free cash flow to afford its dividend. Over the last year it paid out 51% of its free cash flow as dividends, within the usual range for most companies.

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.

Check out our latest analysis for Desarrollos Especiales de Sistemas de Anclaje

Click here to see how much of its profit Desarrollos Especiales de Sistemas de Anclaje 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 decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. It's encouraging to see Desarrollos Especiales de Sistemas de Anclaje has grown its earnings rapidly, up 25% a year 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. Since the start of our data, five years ago, Desarrollos Especiales de Sistemas de Anclaje has lifted its dividend by approximately 15% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

Final Takeaway

Is Desarrollos Especiales de Sistemas de Anclaje worth buying for its dividend? From a dividend perspective, we're encouraged to see that earnings per share have been growing, the company is paying out less than half of its earnings, and a bit over half its free cash flow. It's a promising combination that should mark this company worthy of closer attention.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. Every company has risks, and we've spotted 2 warning signs for Desarrollos Especiales de Sistemas de Anclaje you should know about.

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.