Is It Smart To Buy Delfingen Industry S.A. (EPA:ALDEL) Before It Goes Ex-Dividend?

Delfingen Industry S.A. (EPA:ALDEL) is about to trade ex-dividend in the next three 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. In other words, investors can purchase Delfingen Industry's shares before the 30th of June in order to be eligible for the dividend, which will be paid on the 4th of July.

The company's next dividend payment will be €1.13 per share. Last year, in total, the company distributed €1.13 to shareholders. Looking at the last 12 months of distributions, Delfingen Industry has a trailing yield of approximately 2.2% on its current stock price of €50.8. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Delfingen Industry has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Delfingen Industry

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Delfingen Industry paid out just 18% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. 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. What's good is that dividends were well covered by free cash flow, with the company paying out 8.3% of its cash flow last year.

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.

Click here to see how much of its profit Delfingen Industry 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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Fortunately for readers, Delfingen Industry's earnings per share have been growing at 16% a year for the past five years. Earnings per share are growing rapidly and the company is keeping more than half of its earnings within the business; an attractive combination which could suggest the company is focused on reinvesting to grow earnings further. This will make it easier to fund future growth efforts and we think this is an attractive combination - plus the dividend can always be increased later.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Delfingen Industry has delivered an average of 32% per year annual increase in its dividend, based on the past 10 years of dividend payments. 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 Delfingen Industry got what it takes to maintain its dividend payments? Delfingen Industry has grown its earnings per share while simultaneously reinvesting in the business. Unfortunately it's cut the dividend at least once in the past 10 years, but the conservative payout ratio makes the current dividend look sustainable. There's a lot to like about Delfingen Industry, and we would prioritise taking a closer look at it.

While it's tempting to invest in Delfingen Industry for the dividends alone, you should always be mindful of the risks involved. In terms of investment risks, we've identified 3 warning signs with Delfingen Industry and understanding them should be part of your investment process.

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.