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Is It Smart To Buy Weng Fine Art AG (FRA:WFA) Before It Goes Ex-Dividend?

Simply Wall St

Weng Fine Art AG (FRA:WFA) stock is about to trade ex-dividend in 3 days time. This means that investors who purchase shares on or after the 9th of October will not receive the dividend, which will be paid on the 11th of October.

The upcoming dividend for Weng Fine Art will put a total of €0.2 per share in shareholders' pockets, up from last year's total dividends of €0.1. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

View our latest analysis for Weng Fine Art

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.

Click here to see how much of its profit Weng Fine Art paid out over the last 12 months.

DB:WFA Historical Dividend Yield, October 5th 2019

Have Earnings And Dividends Been Growing?

Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Weng Fine Art has delivered an average of 3.1% per year annual increase in its dividend, based on the past six years of dividend payments.

Final Takeaway

Is Weng Fine Art worth buying for its dividend? Earnings per share have been flat over this time, but we're intrigued to see that Weng Fine Art is paying out less than half its earnings and cash flow as dividends. This is interesting for a few reasons, as it suggests management may be reinvesting heavily in the business, but it also provides room to increase the dividend in time. We would prefer to see earnings growing faster, but the best dividend stocks over the long term typically combine strong earnings per share growth with a low payout ratio, and Weng Fine Art is halfway there. Overall, it's hard to get excited about Weng Fine Art from a dividend perspective.

Want to learn more about Weng Fine Art? Here's a visualisation of its historical rate of revenue and earnings growth.

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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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.