Here's Why We're Wary Of Buying STINAG Stuttgart Invest's (FRA:STG) For Its Upcoming Dividend

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

Thu, May 15, 2025, 9:16 PM 4 min read

Regular readers volition cognize that we emotion our dividends astatine Simply Wall St, which is wherefore it's breathtaking to spot STINAG Stuttgart Invest AG (FRA:STG) is astir to commercialized ex-dividend successful the adjacent 4 days. Typically, the ex-dividend day is 2 concern days earlier the grounds date, which is the day connected which a institution determines the shareholders eligible to person a dividend. The ex-dividend day is important due to the fact that immoderate transaction connected a banal needs to person been settled earlier the grounds day successful bid to beryllium eligible for a dividend. Accordingly, STINAG Stuttgart Invest investors that acquisition the banal connected oregon aft the 21st of May volition not person the dividend, which volition beryllium paid connected the 23rd of May.

The company's adjacent dividend outgo volition beryllium €0.48 per share, and successful the past 12 months, the institution paid a full of €0.48 per share. Based connected the past year's worthy of payments, STINAG Stuttgart Invest has a trailing output of 3.8% connected the existent banal terms of €12.80. Dividends are a large contributor to concern returns for agelong word holders, but lone if the dividend continues to beryllium paid. That's wherefore we should ever cheque whether the dividend payments look sustainable, and if the institution is growing.

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Dividends are typically paid from institution earnings. If a institution pays much successful dividends than it earned successful profit, past the dividend could beryllium unsustainable. STINAG Stuttgart Invest paid retired 137% of nett successful the past year, which we deliberation is typically not sustainable unless determination are mitigating characteristics specified arsenic unusually beardown currency travel oregon a ample currency balance. Yet currency flows are adjacent much important than profits for assessing a dividend, truthful we request to spot if the institution generated capable currency to wage its distribution. Over the past twelvemonth it paid retired 56% of its escaped currency travel arsenic dividends, wrong the accustomed scope for astir companies.

It's disappointing to spot that the dividend was not covered by profits, but currency is much important from a dividend sustainability perspective, and STINAG Stuttgart Invest fortunately did make capable currency to money its dividend. If executives were to proceed paying much successful dividends than the institution reported successful profits, we'd presumption this arsenic a informing sign. Very fewer companies are capable to sustainably wage dividends larger than their reported earnings.

View our latest investigation for STINAG Stuttgart Invest