Should You Buy Baikowski SA (EPA:ALBKK) For Its Upcoming Dividend?

Baikowski SA (EPA:ALBKK) is about to trade ex-dividend in the next three 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 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 Baikowski's shares before the 26th of June to receive the dividend, which will be paid on the 30th of June.

The company's next dividend payment will be €0.30 per share. Last year, in total, the company distributed €0.30 to shareholders. Looking at the last 12 months of distributions, Baikowski has a trailing yield of approximately 1.4% on its current stock price of €21.60. If you buy this business for its dividend, you should have an idea of whether Baikowski's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.

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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. Fortunately Baikowski's payout ratio is modest, at just 29% of profit.

View our latest analysis for Baikowski

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

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. This is why it's a relief to see Baikowski earnings per share are up 7.6% per annum over the last five years. The company is retaining more than half of its earnings within the business, and it has been growing earnings at a decent rate. We think this is generally an attractive combination, as dividends can grow through a combination of earnings growth and or a higher payout ratio over time.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Baikowski has seen its dividend decline 29% per annum on average over the past three years, which is not great to see. Baikowski is a rare case where dividends have been decreasing at the same time as earnings per share have been improving. It's unusual to see, and could point to unstable conditions in the core business, or more rarely an intensified focus on reinvesting profits.

Final Takeaway

Should investors buy Baikowski for the upcoming dividend? Baikowski has seen its earnings per share grow slowly in recent years, and the company reinvests more than half of its profits in the business, which generally bodes well for its future prospects. Overall, Baikowski looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

In light of that, while Baikowski has an appealing dividend, it's worth knowing the risks involved with this stock. For example, we've found 3 warning signs for Baikowski (1 is concerning!) that deserve your attention before investing in the shares.

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.