Why It Might Not Make Sense To Buy Aegon Ltd. (AMS:AGN) For Its Upcoming Dividend

Readers hoping to buy Aegon Ltd. (AMS:AGN) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. 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 important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. This means that investors who purchase Aegon's shares on or after the 4th of September will not receive the dividend, which will be paid on the 26th of September.

The company's next dividend payment will be €0.16 per share, on the back of last year when the company paid a total of €0.32 to shareholders. Looking at the last 12 months of distributions, Aegon has a trailing yield of approximately 5.8% on its current stock price of €5.524. If you buy this business for its dividend, you should have an idea of whether Aegon's dividend is reliable and sustainable. As a result, readers should always check whether Aegon has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Aegon

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. Aegon paid a dividend last year despite being unprofitable. This might be a one-off event, but it's not a sustainable state of affairs in the long run.

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

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Aegon reported a loss last year, and the general trend suggests its earnings have also been declining in recent years, making us wonder if the dividend is at risk.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Aegon has delivered an average of 3.8% per year annual increase in its dividend, based on the past 10 years of dividend payments.

Remember, you can always get a snapshot of Aegon's financial health, by checking our visualisation of its financial health, here.

The Bottom Line

From a dividend perspective, should investors buy or avoid Aegon? First, it's not great to see the company paying a dividend despite being loss-making over the last year. Worse, the general trend in its earnings looks negative in recent years. Aegon doesn't appear to have a lot going for it, and we're not inclined to take a risk on owning it for the dividend.

Although, if you're still interested in Aegon and want to know more, you'll find it very useful to know what risks this stock faces. For example, we've found 1 warning sign for Aegon that we recommend you consider before investing in the business.

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.