Regular readers know that we at Simply Wall St love dividends. That’s why MPH Healthcare AG (FRA:93M1) will have an ex-dividend date within the next four days. The ex-dividend date is usually one business day before the record date, which is the day a company determines which shareholders are eligible to receive a dividend. The ex-dividend date is important because whenever a stock is bought or sold, it takes at least two business days for the transaction to settle. In other words, investors can buy MPH Health Care shares by July 19th to be eligible to receive the dividend paid on July 23rd.
The company’s next dividend will be €1.20 per share, and in the last 12 months the company has paid a total of €1.20 per share. Based on the last year’s payments, MPH Healthcare shares have a historical yield of 4.8% on the current share price of €24.80. Dividends are an important source of income for many shareholders, but the health of the business is essential to maintaining a dividend. As a result, we need to investigate whether MPH Healthcare can afford its dividend, and if the dividend could grow.
View our latest analysis for MPH Healthcare
Dividends are typically paid out of company profits, so if a company pays out more than it earned, its dividend is at a higher risk of being cut. MPH Healthcare pays out just 17% of its profits after tax, which is low enough to provide some breathing room if something unfavourable happens. MPH Healthcare paid a dividend despite having negative free cash flow in the last twelve months. This may be due to heavy investment in the business, but it still doesn’t seem optimal in terms of dividend sustainability.
Click here to see how much MPH Health Care has paid out in benefits over the past 12 months.
Are profits and dividends increasing?
Falling earnings make it very difficult to analyse and safely hold on to a dividend company – if business falters and the dividend is cut, the company’s value could plummet, which is why it’s not ideal to see MPH Healthcare’s earnings per share have fallen 4.4% per year over the past five years.
Many investors assess a company’s dividend performance by evaluating how much the dividend has changed over time. MPH Healthcare’s dividend appears to be roughly the same as it was 9 years ago. When a company’s dividend remains flat while its earnings are falling, this usually indicates that it is paying out a larger percentage of its earnings. This may become unsustainable if earnings fall significantly.
Final conclusion
Does MPH Healthcare have the strength to sustain its dividend payments? Although earnings per share have fallen significantly in recent years, it’s nice to see that the company has a low payout ratio, which could suggest that a dividend cut isn’t a big risk in the near future. In summary, MPH Healthcare looks like a promising dividend stock and is worth taking a closer look at.
In this regard, we need to investigate the risks facing MPH Healthcare. To assist with this, we have found that: 2 Warning Signs for MPH Healthcare Here’s what you need to know before investing in their stock.
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This article by Simply Wall St is general in nature. We use only unbiased methodologies to provide commentary based on historical data and analyst forecasts, and our articles are not intended as financial advice. It is not a recommendation to buy or sell stocks, and does not take into account your objectives, or your financial situation. We seek to provide long-term focused analysis driven by fundamental data. Note that our analysis may not take into account the latest price sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned.
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