Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that technotrans SE (ETR:TTR1) is about to go ex-dividend in just 4 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. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Thus, you can purchase technotrans' shares before the 15th of May in order to receive the dividend, which the company will pay on the 17th of May.
The company's next dividend payment will be €0.64 per share, on the back of last year when the company paid a total of €0.64 to shareholders. Last year's total dividend payments show that technotrans has a trailing yield of 2.4% on the current share price of €27. If you buy this business for its dividend, you should have an idea of whether technotrans's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.
Check out our latest analysis for technotrans
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. technotrans paid out a comfortable 50% of its profit last year. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. technotrans paid a dividend despite reporting negative free cash flow last year. That's typically a bad combination and - if this were more than a one-off - not sustainable.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
When earnings decline, dividend companies become much harder to analyse and own safely. If earnings fall far enough, the company could be forced to cut its dividend. technotrans's earnings per share have fallen at approximately 6.1% a year over the previous five years. When earnings per share fall, the maximum amount of dividends that can be paid also falls.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. technotrans has delivered 18% dividend growth per year on average over the past 10 years.
The Bottom Line
Is technotrans worth buying for its dividend? technotrans's earnings per share have fallen noticeably and, although it paid out less than half its profit as dividends last year, it paid out a disconcertingly high percentage of its cashflow, which is not a great combination. Overall it doesn't look like the most suitable dividend stock for a long-term buy and hold investor.