Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see GBK Beteiligungen AG (BST:GBQ) is about to trade ex-dividend in the next four days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Accordingly, GBK Beteiligungen investors that purchase the stock on or after the 15th of May will not receive the dividend, which will be paid on the 17th of May.
The company's next dividend payment will be €0.25 per share, which looks like a nice increase on last year, when the company distributed a total of €0.10 to shareholders. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. We need to see whether the dividend is covered by earnings and if it's growing.
View our latest analysis for GBK Beteiligungen
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. GBK Beteiligungen distributed an unsustainably high 132% of its profit as dividends to shareholders last year. Without extenuating circumstances, we'd consider the dividend at risk of a cut.
Generally, the higher a company's payout ratio, the more the dividend is at risk of being reduced.
Click here to see how much of its profit GBK Beteiligungen paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Companies with falling earnings are riskier for dividend shareholders. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. GBK Beteiligungen's earnings have collapsed faster than Wile E Coyote's schemes to trap the Road Runner; down a tremendous 32% a year over the past five years.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. GBK Beteiligungen has seen its dividend decline 24% per annum on average over the past four years, which is not great to see. While it's not great that earnings and dividends per share have fallen in recent years, we're encouraged by the fact that management has trimmed the dividend rather than risk over-committing the company in a risky attempt to maintain yields to shareholders.