Dividend Investors: Don't Be Too Quick To Buy Digital Bros S.p.A. (BIT:DIB) For Its Upcoming Dividend
Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Digital Bros S.p.A. (BIT:DIB) is about to trade ex-dividend in the next three days. The ex-dividend date is two business days before a company's record date in most cases, which is the date on which the company determines which shareholders are entitled to receive a dividend. 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. Accordingly, Digital Bros investors that purchase the stock on or after the 16th of November will not receive the dividend, which will be paid on the 18th of November.
The company's next dividend payment will be €0.21 per share, on the back of last year when the company paid a total of €0.21 to shareholders. Last year's total dividend payments show that Digital Bros has a trailing yield of 2.1% on the current share price of €10.08. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether Digital Bros has been able to grow its dividends, or if the dividend might be cut.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Digital Bros paid a dividend last year despite being unprofitable. This might be a one-off event, but it's not a sustainable state of affairs in the long run.
See our latest analysis for Digital Bros
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
When earnings decline, dividend companies become much harder to analyse and own safely. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Digital Bros reported a loss last year, and the general trend suggests its earnings have also been declining in recent years, making us wonder if the dividend is at risk.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last 10 years, Digital Bros has lifted its dividend by approximately 4.9% a year on average.
Remember, you can always get a snapshot of Digital Bros's financial health, by checking our visualisation of its financial health, here.
Final Takeaway
Is Digital Bros an attractive dividend stock, or better left on the shelf? This is not an overtly appealing combination of characteristics, and we're just not that interested in this company's dividend.
Although, if you're still interested in Digital Bros and want to know more, you'll find it very useful to know what risks this stock faces. In terms of investment risks, we've identified 1 warning sign with Digital Bros and understanding them should be part of your investment process.
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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