Yahoo Finance Why It Might Not Make Sense To Buy PULSION Medical Systems SE (MUN:PUS) For Its Upcoming Dividend
It looks like PULSION Medical Systems SE (MUN:PUS) is about to go ex-dividend in the next 4 days. 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 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. Accordingly, PULSION Medical Systems investors that purchase the stock on or after the 1st of July will not receive the dividend, which will be paid on the 3rd of July.
The company's next dividend payment will be €0.88 per share, and in the last 12 months, the company paid a total of €0.88 per share. Calculating the last year's worth of payments shows that PULSION Medical Systems has a trailing yield of 5.4% on the current share price of €16.40. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to check whether the dividend payments are covered, and if earnings are growing.
Check out our latest analysis for PULSION Medical Systems
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. PULSION Medical Systems paid out 101% 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 PULSION Medical Systems paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Businesses with shrinking earnings are tricky from a dividend perspective. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That's why it's not ideal to see PULSION Medical Systems's earnings per share have been shrinking at 4.0% a year over the previous five years.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. PULSION Medical Systems has delivered 36% dividend growth per year on average over the past 10 years. The only way to pay higher dividends when earnings are shrinking is either to pay out a larger percentage of profits, spend cash from the balance sheet, or borrow the money. PULSION Medical Systems 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.
Final Takeaway
From a dividend perspective, should investors buy or avoid PULSION Medical Systems? Earnings per share are in decline and PULSION Medical Systems is paying out what we feel is an uncomfortably 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. PULSION Medical Systems 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.
Having said that, if you're looking at this stock without much concern for the dividend, you should still be familiar of the risks involved with PULSION Medical Systems. Our analysis shows 3 warning signs for PULSION Medical Systems that we strongly recommend you have a look at before investing in the company.
If you're in the market for strong dividend payers, we recommend checking our selection of top 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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