Here's What We Like About Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság's (BUSE:MTELEKOM) Upcoming Dividend

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság (BUSE:MTELEKOM) is about to go ex-dividend in just 4 days. The ex-dividend date generally occurs two days before the record date, which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Therefore, if you purchase Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság's shares on or after the 8th of May, you won't be eligible to receive the dividend, when it is paid on the 20th of May.

The company's next dividend payment will be Ft0100.11 per share. Last year, in total, the company distributed Ft100 to shareholders. Calculating the last year's worth of payments shows that Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság has a trailing yield of 5.9% on the current share price of Ft01688.00. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to investigate whether Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság can afford its dividend, and if the dividend could grow.

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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. Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság paid out 58% of its earnings to investors last year, a normal payout level for most businesses. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. It paid out 24% of its free cash flow as dividends last year, which is conservatively low.

It's positive to see that Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

See our latest analysis for Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

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 earnings fall far enough, the company could be forced to cut its dividend. It's encouraging to see Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság has grown its earnings rapidly, up 34% a year for the past five years. Management appears to be striking a nice balance between reinvesting for growth and paying dividends to shareholders. With a reasonable payout ratio, profits being reinvested, and some earnings growth, Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság could have strong prospects for future increases to the dividend.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, nine years ago, Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság has lifted its dividend by approximately 23% a year on average. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

To Sum It Up

Is Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság worth buying for its dividend? Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság's growing earnings per share and conservative payout ratios make for a decent combination. We also like that it paid out a lower percentage of its cash flow. Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

On that note, you'll want to research what risks Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság is facing. In terms of investment risks, we've identified 1 warning sign with Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság and understanding them should be part of your investment process.

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.