February 22, 2024

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Should You Buy FORIS AG (ETR:FRS) For Its Upcoming Dividend In 4 Days?

FORIS AG (ETR:FRS) is about to trade ex-dividend in the next 4 days. You can purchase shares before the 27th of May in order to receive the dividend, which the company will pay on the 29th of May.

FORIS’s next dividend payment will be €0.10 per share, on the back of last year when the company paid a total of €0.10 to shareholders. Based on the last year’s worth of payments, FORIS has a trailing yield of 2.9% on the current stock price of €3.46. If you buy this business for its dividend, you should have an idea of whether FORIS’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 FORIS

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. FORIS paid out a comfortable 47% of its profit last year.

When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.

Click here to see how much of its profit FORIS paid out over the last 12 months.

XTRA:FRS Historical Dividend Yield May 22nd 2020

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. Fortunately for readers, FORIS’s earnings per share have been growing at 16% a year for the past five years.

The main way most investors will assess a company’s dividend prospects is by checking the historical rate of dividend growth. FORIS’s dividend payments are effectively flat on where they were six years ago.

The Bottom Line

From a dividend perspective, should investors buy or avoid FORIS? Companies like FORIS that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. This strategy can add significant value to shareholders over the long term – as long as it’s done without issuing too many new shares. FORIS ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.

So while FORIS looks good from a dividend perspective, it’s always worthwhile being up to date with the risks involved in this stock. Be aware that FORIS is showing 4 warning signs in our investment analysis, and 1 of those is a bit concerning…

If you’re in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.

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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. 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. Thank you for reading.

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