Yahoo Finance Why You Might Be Interested In ORBIS AG (ETR:OBS) For Its Upcoming Dividend
It looks like ORBIS AG (ETR:OBS) is about to go ex-dividend in the next 3 days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a 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 ORBIS' shares before the 29th of May in order to receive the dividend, which the company will pay on the 31st of May.
The company's next dividend payment will be €0.10 per share. Last year, in total, the company distributed €0.10 to shareholders. Based on the last year's worth of payments, ORBIS stock has a trailing yield of around 1.7% on the current share price of €5.95. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
View our latest analysis for ORBIS
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Fortunately ORBIS's payout ratio is modest, at just 35% of profit. A useful secondary check can be to evaluate whether ORBIS generated enough free cash flow to afford its dividend. The good news is it paid out just 19% of its free cash flow in the last year.
It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
Click here to see how much of its profit ORBIS paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings fall far enough, the company could be forced to cut its dividend. This is why it's a relief to see ORBIS earnings per share are up 2.5% per annum over the last five years. Recent earnings growth has been limited. Yet there are several ways to grow the dividend, and one of them is simply that the company may choose to pay out more of its earnings as dividends.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, 10 years ago, ORBIS has lifted its dividend by approximately 3.6% 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.
Final Takeaway
Is ORBIS worth buying for its dividend? Earnings per share growth has been growing somewhat, and ORBIS is paying out less than half its earnings and cash flow as dividends. This is interesting for a few reasons, as it suggests management may be reinvesting heavily in the business, but it also provides room to increase the dividend in time. It might be nice to see earnings growing faster, but ORBIS is being conservative with its dividend payouts and could still perform reasonably over the long run. ORBIS looks solid on this analysis overall, and we'd definitely consider investigating it more closely.
On that note, you'll want to research what risks ORBIS is facing. Our analysis shows 2 warning signs for ORBIS and you should be aware of these before buying any shares.
A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
