Here's What We Like About Ferrovial's (BME:FER) Upcoming Dividend

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 Ferrovial SE (BME:FER) is about to go ex-dividend in just three 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 an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Meaning, you will need to purchase Ferrovial's shares before the 13th of December to receive the dividend, which will be paid on the 27th of December.

The company's next dividend payment will be €0.023814 per share, on the back of last year when the company paid a total of €0.73 to shareholders. Looking at the last 12 months of distributions, Ferrovial has a trailing yield of approximately 1.8% on its current stock price of €41.00. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether Ferrovial has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Ferrovial

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. Ferrovial paid out 71% of its earnings to investors last year, a normal payout level for most businesses.

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

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Fortunately for readers, Ferrovial's earnings per share have been growing at 14% a year for the past five years. Ferrovial has an average payout ratio which suggests a balance between growing earnings and rewarding shareholders. Given the quick rate of earnings per share growth and current level of payout, there may be a chance of further dividend increases in the future.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last 10 years, Ferrovial has lifted its dividend by approximately 0.6% a year on average. Earnings per share have been growing much quicker than dividends, potentially because Ferrovial is keeping back more of its profits to grow the business.

The Bottom Line

Has Ferrovial got what it takes to maintain its dividend payments? Earnings per share are growing nicely, and Ferrovial is paying out a percentage of its earnings that is around the average for dividend-paying stocks. Overall, Ferrovial looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

So while Ferrovial looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. For example - Ferrovial has 1 warning sign we think you should be aware of.

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.