Huber+Suhner AG (VTX:HUBN) Pays A CHF1.60 Dividend In Just 3 Days

Huber+Suhner AG (VTX:HUBN) is about to trade ex-dividend in the next 3 days. You can purchase shares before the 3rd of April in order to receive the dividend, which the company will pay on the 7th of April.

Huber+Suhner's next dividend payment will be CHF1.60 per share. Last year, in total, the company distributed CHF1.60 to shareholders. Looking at the last 12 months of distributions, Huber+Suhner has a trailing yield of approximately 2.7% on its current stock price of CHF58.8. 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 Huber+Suhner can afford its dividend, and if the dividend could grow.

See our latest analysis for Huber+Suhner

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. That's why it's good to see Huber+Suhner paying out a modest 50% of its earnings. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. It paid out more than half (52%) of its free cash flow in the past year, which is within an average range for most companies.

It's positive to see that Huber+Suhner'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.

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

Have Earnings And Dividends Been Growing?

Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. If earnings fall far enough, the company could be forced to cut its dividend. It's not encouraging to see that Huber+Suhner's earnings are effectively flat over the past five years. We'd take that over an earnings decline any day, but in the long run, the best dividend stocks all grow their earnings per share. Earnings per share growth has been slim, and the company is already paying out a majority of its earnings. While there is some room to both increase the payout ratio and reinvest in the business, generally the higher a payout ratio goes, the lower a company's prospects for future growth.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Huber+Suhner has delivered 7.2% dividend growth per year on average over the past ten years.

To Sum It Up

Is Huber+Suhner an attractive dividend stock, or better left on the shelf? Huber+Suhner has struggled to grow earnings per share, and it's paying out less than half of its earnings and more than half its cash flow to shareholders as dividends. Overall, it's not a bad combination, but we feel that there are likely more attractive dividend prospects out there.

While it's tempting to invest in Huber+Suhner for the dividends alone, you should always be mindful of the risks involved. Every company has risks, and we've spotted 2 warning signs for Huber+Suhner you should know about.

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

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