Yahoo Finance It Might Not Be A Great Idea To Buy Medion AG (ETR:MDN) For Its Next Dividend
It looks like Medion AG (ETR:MDN) is about to go ex-dividend in the next three days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled 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. Therefore, if you purchase Medion's shares on or after the 23rd of November, you won't be eligible to receive the dividend, when it is paid on the 23rd of November.
The company's next dividend payment will be €0.69 per share, and in the last 12 months, the company paid a total of €0.69 per share. Looking at the last 12 months of distributions, Medion has a trailing yield of approximately 4.6% on its current stock price of €15. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. We need to see whether the dividend is covered by earnings and if it's growing.
View our latest analysis for Medion
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. Medion paid out 97% of its earnings, which is more than we're comfortable with, unless there are mitigating circumstances.
Click here to see how much of its profit Medion paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. This is why it's a relief to see Medion earnings per share are up 7.1% per annum over the last five years.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past 10 years, Medion has increased its dividend at approximately 13% a year on average. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.
To Sum It Up
Is Medion an attractive dividend stock, or better left on the shelf? Medion has been growing earnings per share at a reasonable rate, but over the last year its dividend was not well covered by earnings. We're unconvinced on the company's merits, and think there might be better opportunities out there.
If you're not too concerned about Medion's ability to pay dividends, you should still be mindful of some of the other risks that this business faces. For example - Medion 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.
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