There's A Lot To Like About SLOMAN NEPTUN Schiffahrts-Aktiengesellschaft's (HMSE:NEP) Upcoming €1.50 Dividend

SLOMAN NEPTUN Schiffahrts-Aktiengesellschaft (HMSE:NEP) is about to trade ex-dividend in the next 4 days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Therefore, if you purchase SLOMAN NEPTUN Schiffahrts-Aktiengesellschaft's shares on or after the 5th of July, you won't be eligible to receive the dividend, when it is paid on the 9th of July.

The company's next dividend payment will be €1.50 per share, on the back of last year when the company paid a total of €1.50 to shareholders. Calculating the last year's worth of payments shows that SLOMAN NEPTUN Schiffahrts-Aktiengesellschaft has a trailing yield of 2.6% on the current share price of €58.00. If you buy this business for its dividend, you should have an idea of whether SLOMAN NEPTUN Schiffahrts-Aktiengesellschaft's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.

Check out our latest analysis for SLOMAN NEPTUN Schiffahrts-Aktiengesellschaft

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. SLOMAN NEPTUN Schiffahrts-Aktiengesellschaft paid out just 6.4% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. The good news is it paid out just 5.6% of its free cash flow in the last year.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

Click here to see how much of its profit SLOMAN NEPTUN Schiffahrts-Aktiengesellschaft paid out over the last 12 months.

historic-dividend

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. It's encouraging to see SLOMAN NEPTUN Schiffahrts-Aktiengesellschaft has grown its earnings rapidly, up 86% a year for the past five years. SLOMAN NEPTUN Schiffahrts-Aktiengesellschaft looks like a real growth company, with earnings per share growing at a cracking pace and the company reinvesting most of its profits in the business.

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, eight years ago, SLOMAN NEPTUN Schiffahrts-Aktiengesellschaft has lifted its dividend by approximately 5.2% a year on average. Earnings per share have been growing much quicker than dividends, potentially because SLOMAN NEPTUN Schiffahrts-Aktiengesellschaft is keeping back more of its profits to grow the business.

The Bottom Line

Should investors buy SLOMAN NEPTUN Schiffahrts-Aktiengesellschaft for the upcoming dividend? It's great that SLOMAN NEPTUN Schiffahrts-Aktiengesellschaft is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. It's disappointing to see the dividend has been cut at least once in the past, but as things stand now, the low payout ratio suggests a conservative approach to dividends, which we like. It's a promising combination that should mark this company worthy of closer attention.

So while SLOMAN NEPTUN Schiffahrts-Aktiengesellschaft looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. In terms of investment risks, we've identified 1 warning sign with SLOMAN NEPTUN Schiffahrts-Aktiengesellschaft and understanding them should be part of your investment process.

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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