Why It Might Not Make Sense To Buy Aeroporto Guglielmo Marconi di Bologna S.p.A. (BIT:ADB) For Its Upcoming Dividend

Aeroporto Guglielmo Marconi di Bologna S.p.A. (BIT:ADB) stock is about to trade ex-dividend in 3 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. 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. Accordingly, Aeroporto Guglielmo Marconi di Bologna investors that purchase the stock on or after the 6th of May will not receive the dividend, which will be paid on the 8th of May.

The company's next dividend payment will be €0.264 per share. Last year, in total, the company distributed €0.26 to shareholders. Calculating the last year's worth of payments shows that Aeroporto Guglielmo Marconi di Bologna has a trailing yield of 3.3% on the current share price of €8.10. If you buy this business for its dividend, you should have an idea of whether Aeroporto Guglielmo Marconi di Bologna's dividend is reliable and sustainable. So we need to investigate whether Aeroporto Guglielmo Marconi di Bologna can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Aeroporto Guglielmo Marconi di Bologna

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Aeroporto Guglielmo Marconi di Bologna paid out more than half (57%) of its earnings last year, which is a regular payout ratio for most companies.

Click here to see how much of its profit Aeroporto Guglielmo Marconi di Bologna paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That explains why we're not overly excited about Aeroporto Guglielmo Marconi di Bologna's flat earnings over the past five years. We'd take that over an earnings decline any day, but in the long run, the best dividend stocks all grow their earnings per share.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Aeroporto Guglielmo Marconi di Bologna has delivered an average of 5.7% per year annual increase in its dividend, based on the past eight years of dividend payments.

The Bottom Line

Is Aeroporto Guglielmo Marconi di Bologna an attractive dividend stock, or better left on the shelf? Aeroporto Guglielmo Marconi di Bologna's earnings per share have been essentially flat, and the company is paying out more than half of its earnings as dividends to shareholders. It might be worth researching if the company is reinvesting in growth projects that could grow earnings and dividends in the future, but for now we're on the fence about its dividend prospects.

With that being said, if dividends aren't your biggest concern with Aeroporto Guglielmo Marconi di Bologna, you should know about the other risks facing this business. For example - Aeroporto Guglielmo Marconi di Bologna has 2 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.