Regular readers will know that we love our dividends at Simply Wall St, which is why it’s exciting to see PWO AG (ETR:PWO) is about to trade ex-dividend in the next 4 days. Typically, the ex-dividend date is two business days before the record date, which is the date on which a company determines the shareholders eligible 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. This means that investors who purchase PWO’s shares on or after the 22nd of May will not receive the dividend, which will be paid on the 27th of May.
The company’s next dividend payment will be €1.65 per share, on the back of last year when the company paid a total of €1.65 to shareholders. Calculating the last year’s worth of payments shows that PWO has a trailing yield of 6.2% on the current share price of €26.60. 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 PWO 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. It paid out 79% of its earnings as dividends last year, which is not unreasonable, but limits reinvestment in the business and leaves the dividend vulnerable to a business downturn. It could become a concern if earnings started to decline. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. What’s good is that dividends were well covered by free cash flow, with the company paying out 22% of its cash flow last year.
It’s encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don’t drop precipitously.
View our latest analysis for PWO
Click here to see the company’s payout ratio, plus analyst estimates of its future dividends.
XTRA:PWO Historic Dividend May 17th 2026 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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we’re encouraged by the steady growth at PWO, with earnings per share up 7.7% on average over the last five years. 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.
The main way most investors will assess a company’s dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, 10 years ago, PWO has lifted its dividend by approximately 0.6% a year on average.
The Bottom Line
Has PWO got what it takes to maintain its dividend payments? Earnings per share growth has been modest and PWO paid out over half of its profits and less than half of its free cash flow, although both payout ratios are within normal limits. While it does have some good things going for it, we’re a bit ambivalent and it would take more to convince us of PWO’s dividend merits.
With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. For example, PWO has 4 warning signs (and 1 which can’t be ignored) we think you should know about.
If you’re in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.
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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.