Read This Before Considering Société Générale Société anonyme (EPA:GLE) For Its Upcoming €0.90 Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Société Générale Société anonyme (EPA:GLE) is about to trade ex-dividend in the next 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. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Therefore, if you purchase Société Générale Société anonyme's shares on or after the 27th of May, you won't be eligible to receive the dividend, when it is paid on the 29th of May.

The company's upcoming dividend is €0.90 a share, following on from the last 12 months, when the company distributed a total of €0.90 per share to shareholders. Looking at the last 12 months of distributions, Société Générale Société anonyme has a trailing yield of approximately 3.3% on its current stock price of €27.25. If you buy this business for its dividend, you should have an idea of whether Société Générale Société anonyme's dividend is reliable and sustainable. So we need to investigate whether Société Générale Société anonyme can afford its dividend, and if the dividend could grow.

View our latest analysis for Société Générale Société anonyme

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Fortunately Société Générale Société anonyme's payout ratio is modest, at just 41% of profit.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

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

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we're discomforted by Société Générale Société anonyme's 15% per annum decline in earnings in the past five years. Such a sharp decline casts doubt on the future sustainability of the dividend.

We'd also point out that Société Générale Société anonyme issued a meaningful number of new shares in the past year. Trying to grow the dividend while issuing large amounts of new shares reminds us of the ancient Greek tale of Sisyphus - perpetually pushing a boulder uphill.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Société Générale Société anonyme's dividend payments per share have declined at 1.0% per year on average over the past 10 years, which is uninspiring.

Final Takeaway

From a dividend perspective, should investors buy or avoid Société Générale Société anonyme? Earnings per share have shrunk noticeably in recent years, although we like that the company has a low payout ratio. This could suggest a cut to the dividend may not be a major risk in the near future. It doesn't appear an outstanding opportunity, but could be worth a closer look.

So if you want to do more digging on Société Générale Société anonyme, you'll find it worthwhile knowing the risks that this stock faces. In terms of investment risks, we've identified 1 warning sign with Société Générale Société anonyme and understanding them should be part of your investment process.

If you're in the market for strong dividend payers, we recommend checking our selection of top 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.