Readers hoping to buy Hypothekarbank Lenzburg AG (VTX:HBLN) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. Investors can purchase shares before the 24th of March in order to be eligible for this dividend, which will be paid on the 26th of March.
Hypothekarbank Lenzburg’s next dividend payment will be CHF110 per share, on the back of last year when the company paid a total of CHF110 to shareholders. Based on the last year’s worth of payments, Hypothekarbank Lenzburg stock has a trailing yield of around 2.6% on the current share price of CHF4260. If you buy this business for its dividend, you should have an idea of whether Hypothekarbank Lenzburg’s dividend is reliable and sustainable. That’s why we should always check whether the dividend payments appear sustainable, and if the company is growing.
Check out our latest analysis for Hypothekarbank Lenzburg
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 Hypothekarbank Lenzburg’s payout ratio is modest, at just 38% of profit.
Generally speaking, the lower a company’s payout ratios, the more resilient its dividend usually is.
Click here to see how much of its profit Hypothekarbank Lenzburg paid out over the last 12 months.
SWX:HBLN Historical Dividend Yield, March 20th 2020
Have Earnings And Dividends Been Growing?
Companies that aren’t growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. To our modest chagrin, Hypothekarbank Lenzburg earnings per share have been effectively flat over the past year. The best dividend stocks all grow their earnings per share over the long run, but it is hard to draw strong conclusions from any one year period.
Another key way to measure a company’s dividend prospects is by measuring its historical rate of dividend growth. Hypothekarbank Lenzburg’s dividend payments are effectively flat on where they were ten years ago.
To Sum It Up
Has Hypothekarbank Lenzburg got what it takes to maintain its dividend payments? Hypothekarbank Lenzburg’s earnings per share are down marginally over the last year, although we like that it is paying out a low fraction of its earnings. Companies that struggle to grow earnings are not ideal from a dividend perspective, but a one-year decline often doesn’t mean much so we wouldn’t be too quick to write this one off. We think there are likely better opportunities out there.
Curious about whether Hypothekarbank Lenzburg has been able to consistently generate growth? Here’s a chart of its historical revenue and earnings growth.
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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