Don't Buy Lechwerke AG (FRA:LEC) For Its Next Dividend Without Doing These Checks

editorial-team@simplywallst.com (Simply Wall St)

Sat, May 10, 2025, 11:09 PM 3 min read

Regular readers volition cognize that we emotion our dividends astatine Simply Wall St, which is wherefore it's breathtaking to spot Lechwerke AG (FRA:LEC) is astir to commercialized ex-dividend successful the adjacent 3 days. The ex-dividend day is 2 concern days earlier a company's grounds day successful astir cases, which is the day connected which the institution determines which shareholders are entitled to person a dividend. The ex-dividend day is important arsenic the process of colony involves astatine slightest 2 afloat concern days. So if you miss that date, you would not amusement up connected the company's books connected the grounds date. Thus, you tin acquisition Lechwerke's shares earlier the 15th of May successful bid to person the dividend, which the institution volition wage connected the 19th of May.

The company's adjacent dividend outgo volition beryllium €2.80 per share. Last year, successful total, the institution distributed €2.80 to shareholders. Last year's full dividend payments amusement that Lechwerke has a trailing output of 3.8% connected the existent stock terms of €73.50. We emotion seeing companies wage a dividend, but it's besides important to beryllium definite that laying the aureate eggs isn't going to termination our aureate goose! As a result, readers should ever cheque whether Lechwerke has been capable to turn its dividends, oregon if the dividend mightiness beryllium cut.

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If a institution pays retired much successful dividends than it earned, past the dividend mightiness go unsustainable - hardly an perfect situation. Its dividend payout ratio is 82% of profit, which means the institution is paying retired a bulk of its earnings. The comparatively constricted nett reinvestment could dilatory the complaint of aboriginal net growth. We'd beryllium disquieted astir the hazard of a driblet successful earnings. A utile secondary cheque tin beryllium to measure whether Lechwerke generated capable escaped currency travel to spend its dividend. It paid retired 89% of its escaped currency travel arsenic dividends, which is wrong accustomed limits but volition bounds the company's quality to assistance the dividend if there's nary growth.

It's encouraging to spot that the dividend is covered by some nett and currency flow. This mostly suggests the dividend is sustainable, arsenic agelong arsenic net don't driblet precipitously.

View our latest investigation for Lechwerke

Click here to spot however overmuch of its nett Lechwerke paid retired implicit the past 12 months.

Companies with falling net are riskier for dividend shareholders. If net autumn acold enough, the institution could beryllium forced to chopped its dividend. That's wherefore it's not perfect to spot Lechwerke's net per stock person been shrinking astatine 2.9% a twelvemonth implicit the erstwhile 5 years.