Read This Before Considering Stemmer Imaging AG (ETR:S9I) For Its Upcoming 1.9% Dividend
It looks like Stemmer Imaging AG (ETR:S9I) is about to go ex-dividend in the next 4 days. You will need to purchase shares before the 20th of November to receive the dividend, which will be paid on the 22nd of November.
Stemmer Imaging's next dividend payment will be €0.50 per share, on the back of last year when the company paid a total of €0.50 to shareholders. Based on the last year's worth of payments, Stemmer Imaging stock has a trailing yield of around 1.9% on the current share price of €25.8. 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 Stemmer Imaging has been able to grow its dividends, or if the dividend might be cut.
View our latest analysis for Stemmer Imaging
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Stemmer Imaging paid out 74% of its earnings to investors last year, a normal payout level for most businesses. 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. Fortunately, it paid out only 48% of its free cash flow in the past year.
It's positive to see that Stemmer Imaging's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Businesses with shrinking earnings are tricky from a dividend perspective. If earnings fall far enough, the company could be forced to cut its dividend. From this perspective, we're disturbed to see earnings per share plunged 21% over the last 12 months, and we'd wonder if the company has had some kind of major event that has skewed the calculation.
Unfortunately Stemmer Imaging has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.
The Bottom Line
Has Stemmer Imaging got what it takes to maintain its dividend payments? 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. Overall, it's hard to get excited about Stemmer Imaging from a dividend perspective.
Curious what other investors think of Stemmer Imaging? See what analysts are forecasting, with this visualisation of its historical and future estimated earnings and cash flow.
If you're in the market for dividend stocks, we recommend checking our list of top 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 editorial-team@simplywallst.com. 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.
