Desarrollos Especiales de Sistemas de Anclaje, S.A. (BME:DESA) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

It looks like Desarrollos Especiales de Sistemas de Anclaje, S.A. (BME:DESA) is about to go ex-dividend in the next three days. The ex-dividend date is usually set to be two business days before the record date, which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. This means that investors who purchase Desarrollos Especiales de Sistemas de Anclaje's shares on or after the 28th of October will not receive the dividend, which will be paid on the 30th of October.

The company's next dividend payment will be €0.2275148 per share, on the back of last year when the company paid a total of €1.12 to shareholders. Calculating the last year's worth of payments shows that Desarrollos Especiales de Sistemas de Anclaje has a trailing yield of 4.9% on the current share price of €23.00. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether Desarrollos Especiales de Sistemas de Anclaje can afford its dividend, and if the dividend could grow.

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Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Desarrollos Especiales de Sistemas de Anclaje has a low and conservative payout ratio of just 24% of its income after tax. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Over the last year, it paid out more than three-quarters (86%) of its free cash flow generated, which is fairly high and may be starting to limit reinvestment in the business.

It's positive to see that Desarrollos Especiales de Sistemas de Anclaje's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

View our latest analysis for Desarrollos Especiales de Sistemas de Anclaje

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

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 decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That's why it's comforting to see Desarrollos Especiales de Sistemas de Anclaje's earnings have been skyrocketing, up 36% per annum 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. Desarrollos Especiales de Sistemas de Anclaje has delivered an average of 10% per year annual increase in its dividend, based on the past seven years of dividend payments. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

To Sum It Up

Is Desarrollos Especiales de Sistemas de Anclaje an attractive dividend stock, or better left on the shelf? From a dividend perspective, we're encouraged to see that earnings per share have been growing, the company is paying out less than half of its earnings, and a bit over half its free cash flow. It's a promising combination that should mark this company worthy of closer attention.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. For example, we've found 4 warning signs for Desarrollos Especiales de Sistemas de Anclaje (2 are concerning!) that deserve your attention before investing in the shares.

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