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There's A Lot To Like About Hannover Rück SE's (ETR:HNR1) Upcoming €5.50 Dividend

Simply Wall St

It looks like Hannover Rück SE (ETR:HNR1) is about to go ex-dividend in the next 4 days. If you purchase the stock on or after the 7th of May, you won't be eligible to receive this dividend, when it is paid on the 11th of May.

Hannover Rück's next dividend payment will be €5.50 per share. Last year, in total, the company distributed €5.50 to shareholders. Looking at the last 12 months of distributions, Hannover Rück has a trailing yield of approximately 3.8% on its current stock price of €145.5. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Hannover Rück has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Hannover Rück

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. That's why it's good to see Hannover Rück paying out a modest 38% of its earnings.

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.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

XTRA:HNR1 Historical Dividend Yield May 2nd 2020

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. 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 Hannover Rück earnings per share are up 5.4% per annum over the last five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last ten years, Hannover Rück has lifted its dividend by approximately 10% a year on average. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

To Sum It Up

From a dividend perspective, should investors buy or avoid Hannover Rück? Hannover Rück has seen its earnings per share grow slowly in recent years, and the company reinvests more than half of its profits in the business, which generally bodes well for its future prospects. In summary, Hannover Rück appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

While it's tempting to invest in Hannover Rück for the dividends alone, you should always be mindful of the risks involved. For example - Hannover Rück has 1 warning sign we think you should be aware of.

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.

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.

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. Thank you for reading.