Don't Race Out To Buy Euroland Corporate Société anonyme (EPA:MLERO) Just Because It's Going Ex-Dividend

Euroland Corporate Société anonyme (EPA:MLERO) is about to trade ex-dividend in the next 4 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 of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Meaning, you will need to purchase Euroland Société anonyme's shares before the 31st of May to receive the dividend, which will be paid on the 4th of June.

The company's next dividend payment will be €0.132 per share, and in the last 12 months, the company paid a total of €0.13 per share. Based on the last year's worth of payments, Euroland Société anonyme has a trailing yield of 5.9% on the current stock price of €2.22. 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 Euroland Société anonyme has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Euroland Société anonyme

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. It paid out 75% of its earnings as dividends last year, which is not unreasonable, but limits reinvestment in the business and leaves the dividend vulnerable to a business downturn. It could become a concern if earnings started to decline.

When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.

Click here to see how much of its profit Euroland Société anonyme paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. From this perspective, we're disturbed to see earnings per share plunged 24% over the last 12 months, and we'd wonder if the company has had some kind of major event that has skewed the calculation.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Euroland Société anonyme has seen its dividend decline 14% per annum on average over the past two years, which is not great to see. While it's not great that earnings and dividends per share have fallen in recent years, we're encouraged by the fact that management has trimmed the dividend rather than risk over-committing the company in a risky attempt to maintain yields to shareholders.

Final Takeaway

Is Euroland Société anonyme worth buying for its dividend? We're not overly enthused to see Euroland Société anonyme's earnings in retreat at the same time as the company is paying out more than half of its earnings as dividends to shareholders. This is not an overtly appealing combination of characteristics, and we're just not that interested in this company's dividend.

Although, if you're still interested in Euroland Société anonyme and want to know more, you'll find it very useful to know what risks this stock faces. Every company has risks, and we've spotted 7 warning signs for Euroland Société anonyme (of which 2 can't be ignored!) you should know about.

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.