Know This Before Buying ANY Biztonsági Nyomda Nyrt. (BUSE:ANY) For Its Dividend

By
Simply Wall St
Published
February 22, 2021
BUSE:ANY
Source: Shutterstock

Could ANY Biztonsági Nyomda Nyrt. (BUSE:ANY) be an attractive dividend share to own for the long haul? Investors are often drawn to strong companies with the idea of reinvesting the dividends. Yet sometimes, investors buy a stock for its dividend and lose money because the share price falls by more than they earned in dividend payments.

A high yield and a long history of paying dividends is an appealing combination for ANY Biztonsági Nyomda Nyrt. We'd guess that plenty of investors have purchased it for the income. Some simple research can reduce the risk of buying ANY Biztonsági Nyomda Nyrt for its dividend - read on to learn more.

Explore this interactive chart for our latest analysis on ANY Biztonsági Nyomda Nyrt!

historic-dividend
BUSE:ANY Historic Dividend February 23rd 2021

Payout ratios

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Comparing dividend payments to a company's net profit after tax is a simple way of reality-checking whether a dividend is sustainable. ANY Biztonsági Nyomda Nyrt paid out 166% of its profit as dividends, over the trailing twelve month period. Unless there are extenuating circumstances, from the perspective of an investor who hopes to own the company for many years, a payout ratio of above 100% is definitely a concern.

Another important check we do is to see if the free cash flow generated is sufficient to pay the dividend. ANY Biztonsági Nyomda Nyrt paid out 0.6% of its free cash flow as dividends last year, which is conservative and suggests the dividend is sustainable. It's disappointing to see that the dividend was not covered by profits, but cash is more important from a dividend sustainability perspective, and ANY Biztonsági Nyomda Nyrt fortunately did generate enough cash to fund its dividend. Still, if the company repeatedly paid a dividend greater than its profits, we'd be concerned. Very few companies are able to sustainably pay dividends larger than their reported earnings.

We update our data on ANY Biztonsági Nyomda Nyrt every 24 hours, so you can always get our latest analysis of its financial health, here.

Dividend Volatility

One of the major risks of relying on dividend income, is the potential for a company to struggle financially and cut its dividend. Not only is your income cut, but the value of your investment declines as well - nasty. ANY Biztonsági Nyomda Nyrt has been paying dividends for a long time, but for the purpose of this analysis, we only examine the past 10 years of payments. During this period the dividend has been stable, which could imply the business could have relatively consistent earnings power. During the past 10-year period, the first annual payment was Ft35.0 in 2011, compared to Ft89.0 last year. Dividends per share have grown at approximately 9.8% per year over this time.

Businesses that can grow their dividends at a decent rate and maintain a stable payout can generate substantial wealth for shareholders over the long term.

Dividend Growth Potential

Dividend payments have been consistent over the past few years, but we should always check if earnings per share (EPS) are growing, as this will help maintain the purchasing power of the dividend. In the last five years, ANY Biztonsági Nyomda Nyrt's earnings per share have shrunk at approximately 8.6% per annum. Declining earnings per share over a number of years is not a great sign for the dividend investor. Without some improvement, this does not bode well for the long term value of a company's dividend.

Conclusion

Dividend investors should always want to know if a) a company's dividends are affordable, b) if there is a track record of consistent payments, and c) if the dividend is capable of growing. We're not keen on the fact that ANY Biztonsági Nyomda Nyrt paid out such a high percentage of its income, although its cashflow is in better shape. Second, earnings per share have actually shrunk, but at least the dividends have been relatively stable. Ultimately, ANY Biztonsági Nyomda Nyrt comes up short on our dividend analysis. It's not that we think it is a bad company - just that there are likely more appealing dividend prospects out there on this analysis.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. For example, we've identified 4 warning signs for ANY Biztonsági Nyomda Nyrt (2 can't be ignored!) that you should be aware of before investing.

We have also put together a list of global stocks with a market capitalisation above $1bn and yielding more 3%.

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