Don’t Buy AMAG Austria Metall AG (VIE:AMAG) For Its Next Dividend Without Doing These Checks

Some investors rely on dividends for growing their wealth, and if you’re one of those dividend sleuths, you might be intrigued to know that AMAG Austria Metall AG (VIE:AMAG) is about to go ex-dividend in just 4 days. The ex-dividend date is commonly two business days 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. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. In other words, investors can purchase AMAG Austria Metall’s shares before the 18th of April in order to be eligible for the dividend, which will be paid on the 23rd of April.

The company’s upcoming dividend is €1.20 a share, following on from the last 12 months, when the company distributed a total of €1.20 per share to shareholders. Based on the last year’s worth of payments, AMAG Austria Metall has a trailing yield of 4.8% on the current stock price of €25.10. We love seeing companies pay a dividend, but it’s also important to be sure that laying the golden eggs isn’t going to kill our golden goose! That’s why we should always check whether the dividend payments appear sustainable, and if the company is growing.

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Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Last year AMAG Austria Metall paid out 98% of its profits as dividends to shareholders, suggesting the dividend is not well covered by 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. Over the past year it paid out 177% of its free cash flow as dividends, which is uncomfortably high. It’s hard to consistently pay out more cash than you generate without either borrowing or using company cash, so we’d wonder how the company justifies this payout level.

As AMAG Austria Metall’s dividend was not well covered by either earnings or cash flow, we would be concerned that this dividend could be at risk over the long term.

See our latest analysis for AMAG Austria Metall

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

WBAG:AMAG Historic Dividend April 13th 2025 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 AMAG Austria Metall earnings per share are up 2.3% per annum over the last five years. With limited earnings growth and paying out a concerningly high percentage of its earnings, the prospects of future dividend growth don’t look so bright here.

The main way most investors will assess a company’s dividend prospects is by checking the historical rate of dividend growth. It looks like the AMAG Austria Metall dividends are largely the same as they were 10 years ago.

Final Takeaway

Has AMAG Austria Metall got what it takes to maintain its dividend payments? AMAG Austria Metall is paying out an uncomfortably high percentage of both earnings and cash flow as dividends, although at least earnings per share are growing somewhat. Bottom line: AMAG Austria Metall has some unfortunate characteristics that we think could lead to sub-optimal outcomes for dividend investors.

So if you’re still interested in AMAG Austria Metall despite it’s poor dividend qualities, you should be well informed on some of the risks facing this stock. Every company has risks, and we’ve spotted 3 warning signs for AMAG Austria Metall (of which 2 are potentially serious!) you should know about.

Generally, we wouldn’t recommend just buying the first dividend stock you see. Here’s a curated list of interesting stocks that are strong dividend payers.

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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.