Should You Buy Eurobank Ergasias Services and Holdings S.A. (ATH:EUROB) For Its Upcoming Dividend?

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Eurobank Ergasias Services and Holdings S.A. (ATH:EUROB) is about to trade ex-dividend in the next 2 days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. 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. In other words, investors can purchase Eurobank Ergasias Services and Holdings' shares before the 25th of July in order to be eligible for the dividend, which will be paid on the 31st of July.

The upcoming dividend for Eurobank Ergasias Services and Holdings will put a total of €0.0933 per share in shareholders' pockets. 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 Eurobank Ergasias Services and Holdings has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Eurobank Ergasias Services and Holdings

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. That's why it's good to see Eurobank Ergasias Services and Holdings paying out a modest 26% of its earnings. Eurobank Ergasias Services and Holdings paid a dividend despite reporting negative free cash flow last year. That's typically a bad combination and - if this were more than a one-off - not sustainable.

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 the company's payout ratio, plus analyst estimates of its future dividends.

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. It's encouraging to see Eurobank Ergasias Services and Holdings has grown its earnings rapidly, up 38% a year for the past five years.

This is Eurobank Ergasias Services and Holdings's first year of paying a regular dividend, so it doesn't have much of a history yet to compare to.

Final Takeaway

Is Eurobank Ergasias Services and Holdings worth buying for its dividend? Companies like Eurobank Ergasias Services and Holdings that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. In summary, Eurobank Ergasias Services and Holdings appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

While it's tempting to invest in Eurobank Ergasias Services and Holdings for the dividends alone, you should always be mindful of the risks involved. We've identified 2 warning signs with Eurobank Ergasias Services and Holdings (at least 1 which is concerning), and understanding these should be part of your investment process.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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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