Yahoo Finance HOCHTIEF Aktiengesellschaft (ETR:HOT) Is About To Go Ex-Dividend, And It Pays A 4.2% Yield
HOCHTIEF Aktiengesellschaft (ETR:HOT) 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 of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Therefore, if you purchase HOCHTIEF's shares on or after the 26th of April, you won't be eligible to receive the dividend, when it is paid on the 30th of April.
The company's next dividend payment will be €4.40 per share, on the back of last year when the company paid a total of €4.40 to shareholders. Calculating the last year's worth of payments shows that HOCHTIEF has a trailing yield of 4.2% on the current share price of €104.90. 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! As a result, readers should always check whether HOCHTIEF has been able to grow its dividends, or if the dividend might be cut.
See our latest analysis for HOCHTIEF
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. HOCHTIEF paid out more than half (63%) of its earnings last year, which is a regular payout ratio for most companies. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Thankfully its dividend payments took up just 27% of the free cash flow it generated, which is a comfortable payout ratio.
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 the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
When earnings decline, dividend companies become much harder to analyse and own safely. If earnings fall far enough, the company could be forced to cut its dividend. So we're not too excited that HOCHTIEF's earnings are down 3.5% 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. HOCHTIEF has delivered 11% dividend growth per year on average over the past 10 years. That's interesting, but the combination of a growing dividend despite declining earnings can typically only be achieved by paying out more of the company's profits. This can be valuable for shareholders, but it can't go on forever.
To Sum It Up
From a dividend perspective, should investors buy or avoid HOCHTIEF? The payout ratios are within a reasonable range, implying the dividend may be sustainable. Declining earnings are a serious concern, however, and could pose a threat to the dividend in future. To summarise, HOCHTIEF looks okay on this analysis, although it doesn't appear a stand-out opportunity.
So if you want to do more digging on HOCHTIEF, you'll find it worthwhile knowing the risks that this stock faces. For example, we've found 1 warning sign for HOCHTIEF that we recommend you consider before investing in the business.
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.
