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Is Datalogic SpA (BIT:DAL) worth considering for its upcoming dividend?

Datalogic SpA (BIT:DAL) shares are set to go ex-dividend in 3 days. The ex-dividend date is usually set one business day before the record date, which is the cut-off date on which you must be on the company’s books as a shareholder in order to receive the dividend. It’s important to know the ex-dividend date because any share transactions must settle on or before the record date. This means you’ll need to buy Datalogic shares before July 15th to receive the dividend, which will be paid on July 17th.

The company’s upcoming dividend is €0.12 per share, following the last 12 months when the company paid a total of €0.12 per share to shareholders. Based on the last year’s payouts, Datalogic has a yield of 2.2% at the current share price of €5.52. If you buy this company for its dividend, you should have an idea of ​​whether Datalogic’s dividend is reliable and sustainable. As such, readers should always check whether Datalogic has been able to increase its dividends, or if the dividend could be cut.

Check out our latest analysis for Datalogic

If a company pays out more in dividends than it earns, the dividend could become unsustainable – not an ideal situation. Datalogic paid out a comfortable 48% of its profit last year. That said, even highly profitable companies can sometimes fall short of generating enough cash to pay their dividend, so we should always check whether the dividend is covered by cash flow. It paid out 68% of its free cash flow as dividends last year, which is within the normal range for most companies.

It’s positive that Datalogic’s dividend is covered by both profits and cash flow, since this usually indicates 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 dividend payout ratio and analyst estimates of its future dividends.

BIT:DAL Historic dividend July 11, 2024

Are profits and dividends growing?

Companies with declining earnings are tough from a dividend perspective. Investors love dividends, so if earnings are falling and the dividend is cut, expect the stock to be sold off heavily at the same time. Readers will then understand why we are concerned when we see that Datalogic’s earnings per share have fallen 25% per year over the past five years. Such a steep decline casts doubt on the future sustainability of the dividend.

The main way most investors assess a company’s dividend prospects is to look at its historical dividend growth rate. Datalogic has seen its dividend decline by an average of 2.8% per year over the past 10 years, which isn’t great. While it’s not great that earnings and dividends per share have declined in recent years, it’s encouraging that management has cut the dividend rather than risk overextending the company in a risky attempt to maintain shareholder returns.

To sum up

From a dividend perspective, should investors buy or avoid Datalogic? Earnings per share have fallen significantly, although Datalogic has paid out less than half of its earnings and free cash flow over the past year, leaving some margin of safety. Overall, it’s hard to get excited about Datalogic from a dividend perspective.

So if you want to learn more about Datalogic, it’s worth knowing the risks this stock is facing. To help you do that, we’ve uncovered 2 warning signs for Datalogic that you should know about before investing in their shares.

If you are interested in companies that pay high dividends, we recommend check out our pick of the best dividend stocks.

Valuation is a complicated process, but we help simplify it.

Find out if Datalogic is potentially overvalued or undervalued by reading our comprehensive analysis, which includes: fair value estimates, risks and warnings, dividends, internal transactions and financial condition.

See a free analysis

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This Simply Wall St article is for general information purposes only. Our commentary is based solely on historical data and analyst forecasts, and is based on an objective methodology. Our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or your financial situation. Our goal is to provide you with long-term, focused analysis based on fundamental data. Please note that our analysis may not reflect the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Valuation is a complicated process, but we help simplify it.

Find out if Datalogic is potentially overvalued or undervalued by reading our comprehensive analysis, which includes: fair value estimates, risks and warnings, dividends, internal transactions and financial condition.

See a free analysis

Have feedback on this article? Concerned about the content? Contact us directly. Alternatively, send an email to [email protected]