Yahoo Finance Don't Buy Van Lanschot Kempen NV (AMS:VLK) For Its Next Dividend Without Doing These Checks
Van Lanschot Kempen NV (AMS:VLK) is about to trade ex-dividend in the next three days. The ex-dividend date occurs one day 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. Accordingly, Van Lanschot Kempen investors that purchase the stock on or after the 29th of May will not receive the dividend, which will be paid on the 6th of June.
The company's next dividend payment will be €1.75 per share, on the back of last year when the company paid a total of €1.75 to shareholders. Based on the last year's worth of payments, Van Lanschot Kempen has a trailing yield of 6.1% on the current stock price of €28.85. 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 Van Lanschot Kempen can afford its dividend, and if the dividend could grow.
Check out our latest analysis for Van Lanschot Kempen
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Last year, Van Lanschot Kempen paid out 92% of its income as dividends, which is above a level that we're comfortable with, especially if the company needs to reinvest in its business.
When a company pays out a dividend that is not well covered by profits, the dividend is generally seen as more vulnerable to being cut.
Click here to see how much of its profit Van Lanschot Kempen paid out over the last 12 months.
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. Van Lanschot Kempen's earnings have collapsed faster than Wile E Coyote's schemes to trap the Road Runner; down a tremendous 60% a year over the past five years.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Van Lanschot Kempen has delivered 58% dividend growth per year on average over the past two years. That's intriguing, but the combination of growing dividends despite declining earnings can typically only be achieved by paying out a larger percentage of profits. Van Lanschot Kempen is already paying out a high percentage of its income, so without earnings growth, we're doubtful of whether this dividend will grow much in the future.
To Sum It Up
Is Van Lanschot Kempen an attractive dividend stock, or better left on the shelf? Not only are earnings per share shrinking, but Van Lanschot Kempen is paying out a disconcertingly high percentage of its profit as dividends. It's not that we hate the business, but we feel that these characeristics are not desirable for investors seeking a reliable dividend stock to own for the long term. This is not an overtly appealing combination of characteristics, and we're just not that interested in this company's dividend.
Although, if you're still interested in Van Lanschot Kempen and want to know more, you'll find it very useful to know what risks this stock faces. For example - Van Lanschot Kempen has 2 warning signs we think you should be aware of.
If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
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