Readers hoping to buy Poste Italiane SpA (BIT:PST) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. You will need to purchase shares before the 18th of November to receive the dividend, which will be paid on the 20th of November.
Poste Italiane's next dividend payment will be €0.15 per share, on the back of last year when the company paid a total of €0.31 to shareholders. Calculating the last year's worth of payments shows that Poste Italiane has a trailing yield of 2.8% on the current share price of €11.115. If you buy this business for its dividend, you should have an idea of whether Poste Italiane's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.
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. Poste Italiane is paying out an acceptable 54% of its profit, a common payout level among most companies.
Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. This is why it's a relief to see Poste Italiane earnings per share are up 7.3% per annum over the last five years.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Poste Italiane has seen its dividend decline 2.4% per annum on average over the past four years, which is not great to see. It's unusual to see earnings per share increasing at the same time as dividends per share have been in decline. We'd hope it's because the company is reinvesting heavily in its business, but it could also suggest business is lumpy.
Is Poste Italiane worth buying for its dividend? Poste Italiane has been generating some growth in earnings per share while paying out more than half of its earnings to shareholders in the form of dividends. At best we would put it on a watch-list to see if business conditions improve, as it doesn't look like a clear opportunity right now.
Ever wonder what the future holds for Poste Italiane? See what the eight analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.