Should you buy Moncler SpA (BIT: MONC) for its next dividend?

Readers wishing to buy Moncler SpA (BIT: MONC) for its dividend will have to make its move shortly, as the stock is about to trade ex-dividend. Typically, the ex-dividend date is one business day prior to the record date which is the date a company determines which shareholders are eligible to receive a dividend. The ex-dividend date is important because every time a stock is bought or sold, the transaction takes at least two business days to settle. As a result, Moncler investors who buy the shares on or after May 24 will not receive the dividend, which will be paid on May 26.

The company’s future dividend is € 0.45 per share, extending the last 12 months, when the company has distributed a total of € 0.45 per share to shareholders. Based on the value of last year’s payouts, the Moncler share has a trailing yield of around 0.9% on the current share price of € 52.76. We love to see companies pay a dividend, but it’s also important to make sure that laying the golden eggs doesn’t kill our golden goose! We need to see if the dividend is covered by profits and if it increases.

See our latest review for Moncler

Dividends are usually paid out of company profits, so if a company pays more than it earned, its dividend is usually more at risk of being reduced. This is why it is good to see Moncler donating a modest 38% of its income.

Click here to view the company’s payout ratio, as well as analysts’ estimates of its future dividends.

BIT: Historic MONC dividend May 19, 2021

Have profits and dividends increased?

Companies with strong growth prospects generally make the best dividend payers because dividends are easier to grow when earnings per share improve. If profits fall enough, the company could be forced to cut its dividend. Luckily for readers, Moncler’s earnings per share have grown 12% per year over the past five years. Earnings per share are growing rapidly and the company keeps more than half of its profits with the company; an interesting combination that could suggest that the company is focusing on reinvestment to further increase profits. This will make it easier to fund future growth efforts and we think this is an interesting combination – and the dividend can always be increased later.

Another key way to measure a company’s dividend outlook is to measure its historical rate of dividend growth. Over the past seven years, Moncler has increased its dividend by around 24% per year on average. It’s great to see earnings per share grow rapidly over several years and dividends per share grow at the same time.

To summarize

Should investors buy Moncler for the upcoming dividend? Companies like Moncler, which are growing rapidly and paying a small fraction of the profits, usually reinvest heavily in their business. This strategy can provide significant added value to shareholders over the long term – provided it is carried out without issuing too many new shares. Moncler ticks a lot of the boxes for us from a dividend standpoint, and we believe these characteristics should mark the company as deserving more attention.

So although Moncler looks good from a dividend standpoint, it is still worth being up to date with the risks involved in this stock. Our analysis shows 1 warning sign for Moncler and you need to be aware of this before you buy any stocks.

If you are looking for dividend paying stocks, we recommend that you take a look at our list of top dividend paying stocks with a yield above 2% and a future dividend.

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This Simply Wall St article is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take into account your goals or your financial situation. We aim to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative information. Simply Wall St has no position in any of the stocks mentioned.
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