Hera SpA (BIT: HER) has passed our checks and is about to pay a dividend of € 0.11

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Hera SpA (BIT: HER) is set to trade ex-dividend within the next 4 days. The ex-dividend date occurs one day before the registration date which is the day on which shareholders must be entered in the books of the company to receive a dividend. The ex-dividend date is important because any share transaction must have been settled before the registration date to be eligible for a dividend. This means that investors who buy Hera shares from July 5 will not receive the dividend, which will be paid on July 7.

The company’s next dividend will be € 0.11 per share, and over the past 12 months the company has paid a total of € 0.11 per share. Last year’s total dividend payments show that Hera has a sliding yield of 3.1% on the current share price of € 3.522. We love to see companies pay a dividend, but it’s also important to make sure that laying the golden eggs is not going to kill our goose that lays the golden eggs! That is why we should always check whether dividend payments seem sustainable and whether the business is growing.

See our latest review for Hera

Dividends are usually paid out of company profits. If a company pays more dividends than it made a profit, then the dividend could be unsustainable. Hera paid 52% of its profits to investors last year, a normal payout level for most companies. Yet cash flow is still more important than earnings in valuing a dividend, so we need to see if the company has generated enough cash to pay for its distribution. Fortunately, she has only paid out 32% of her free cash flow in the past year.

It is positive to see that Hera’s dividend is covered by both earnings and cash flow, as this is usually a sign that the dividend is sustainable, and a lower payout ratio usually suggests a higher. margin of safety before the dividend is cut.

Click here to view the company’s payout ratio, as well as analysts’ estimates of its future dividends.

BIT: HER Historical Dividend June 30, 2021

Have profits and dividends increased?

Companies with strong growth prospects generally make the best dividend payers because dividends are easier to grow when earnings per share improve. Investors love dividends, so if profits go down and the dividend is reduced, expect a stock to be sold massively at the same time. Luckily for readers, Hera’s earnings per share have grown 12% per year over the past five years. Hera has an average payout ratio that suggests a balance between earnings growth and shareholder reward. This is a reasonable combination that could portend further dividend increases in the future.

Another key way to measure a company’s dividend outlook is to measure its historical rate of dividend growth. Over the past 10 years, Hera has increased its dividend by around 2.0% per year on average. Earnings per share have grown much faster than dividends, potentially because Hera is withholding more of her earnings to grow the business.

The bottom line

Does Hera have what it takes to maintain her dividend payments? We like the growth in Hera’s earnings per share and the fact that although its payout ratio is average, it has paid a lower percentage of its cash flow. Hera looks solid on this analysis overall, and we would definitely consider taking a closer look.

On that note, you’ll want to research the risks Hera faces. For example, we found 1 warning sign for Hera which we recommend that you consider before investing in the business.

A common investment mistake is to buy the first interesting stock you see. Here you will find a list of promising dividend paying stocks with a yield above 2% and an upcoming dividend.

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This Simply Wall St article is general in nature. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative material. Simply Wall St has no position in any of the stocks mentioned.
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