Read This Before Considering DNXCorp SE (EPA:ALDNX) For Its Upcoming €0.25 Dividend

DNXCorp SE (EPA:ALDNX) is about to trade ex-dividend in the next two 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 of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. This means that investors who purchase DNXCorp's shares on or after the 8th of July will not receive the dividend, which will be paid on the 10th of July.

The company's upcoming dividend is €0.25 a share, following on from the last 12 months, when the company distributed a total of €3.00 per share to shareholders. Last year's total dividend payments show that DNXCorp has a trailing yield of 8.8% on the current share price of €19.95. 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 DNXCorp has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for DNXCorp

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. DNXCorp paid out 155% of profit in the past year, which we think is typically not sustainable unless there are mitigating characteristics such as unusually strong cash flow or a large cash balance.

Click here to see how much of its profit DNXCorp 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. For that reason, it's encouraging to see DNXCorp's earnings over the past year have risen 49%. While we'd be remiss not to point out that a year is a very short time in dividend investing, it's an encouraging sign so far.

One year is a very short time frame in the pantheon of investing, so we wouldn't get too hung up on these numbers.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. DNXCorp has delivered an average of 1.6% per year annual increase in its dividend, based on the past 10 years of dividend payments. Earnings per share have been growing much quicker than dividends, potentially because DNXCorp is keeping back more of its profits to grow the business.

Final Takeaway

Is DNXCorp an attractive dividend stock, or better left on the shelf? We're not enthused to see DNXCorp's dividend was not well covered by earnings over the last year, although it is great to see earnings growing. We're unconvinced on the company's merits, and think there might be better opportunities out there.

If you're not too concerned about DNXCorp's ability to pay dividends, you should still be mindful of some of the other risks that this business faces. For example - DNXCorp has 3 warning signs we think you should be aware of.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com