Yahoo Finanza Flughafen Zürich (VTX:FHZN) Could Be A Buy For Its Upcoming Dividend
Readers hoping to buy Flughafen Zürich AG (VTX:FHZN) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Therefore, if you purchase Flughafen Zürich's shares on or after the 24th of April, you won't be eligible to receive the dividend, when it is paid on the 26th of April.
The company's upcoming dividend is CHF05.30 a share, following on from the last 12 months, when the company distributed a total of CHF5.30 per share to shareholders. Calculating the last year's worth of payments shows that Flughafen Zürich has a trailing yield of 2.8% on the current share price of CHF0191.50. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether Flughafen Zürich has been able to grow its dividends, or if the dividend might be cut.
Check out our latest analysis for Flughafen Zürich
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. Fortunately Flughafen Zürich's payout ratio is modest, at just 40% of profit. 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. It distributed 42% of its free cash flow as dividends, a comfortable payout level for most companies.
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 the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings fall far enough, the company could be forced to cut its dividend. This is why it's a relief to see Flughafen Zürich earnings per share are up 5.0% per annum over the last five years. The company is retaining more than half of its earnings within the business, and it has been growing earnings at a decent rate. Organisations that reinvest heavily in themselves typically get stronger over time, which can bring attractive benefits such as stronger earnings and dividends.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Flughafen Zürich has delivered an average of 10% per year annual increase in its dividend, based on the past 10 years of dividend payments. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.
The Bottom Line
Should investors buy Flughafen Zürich for the upcoming dividend? Earnings per share have been growing moderately, and Flughafen Zürich is paying out less than half its earnings and cash flow as dividends, which is an attractive combination as it suggests the company is investing in growth. It might be nice to see earnings growing faster, but Flughafen Zürich is being conservative with its dividend payouts and could still perform reasonably over the long run. Flughafen Zürich 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 Flughafen Zürich is facing. To help with this, we've discovered 1 warning sign for Flughafen Zürich that you should be aware of before investing in their 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
