Readers hoping to buy Varia US Properties AG (VTX:VARN) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. You will need to purchase shares before the 8th of November to receive the dividend, which will be paid on the 12th of November.
Varia US Properties's next dividend payment will be CHF0.5 per share, and in the last 12 months, the company paid a total of CHF2.2 per share. Last year's total dividend payments show that Varia US Properties has a trailing yield of 5.4% on the current share price of CHF39.2. If you buy this business for its dividend, you should have an idea of whether Varia US Properties's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
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. Varia US Properties paid out 58% of its earnings to investors last year, a normal payout level for most businesses.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. With that in mind, it's good to see earnings have grown 7.5% on last year. While earnings have been growing at a credible rate, the company is paying out a majority of its earnings to shareholders. If management lifts the payout ratio further, we'd take this as a tacit signal that the company's growth prospects are slowing.
One year is not very long in the grand scheme of things though, so we wouldn't draw too strong a conclusion based on these results.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the past three years, Varia US Properties has increased its dividend at approximately 17% a year on average. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.
The Bottom Line
Is Varia US Properties worth buying for its dividend? Varia US Properties has been generating some growth in earnings per share while paying out more than half of its earnings to shareholders in the form of dividends. We think this is a pretty attractive combination, and would be interested in investigating Varia US Properties more closely.
Keen to explore more data on Varia US Properties's financial performance? Check out our visualisation of its historical revenue and earnings growth.
If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.
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If you spot an error that warrants correction, please contact the editor at email@example.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. Thank you for reading.