Is It Worth Considering Duna House Holding Nyrt. (BUSE:DUNAHOUSE) For Its Upcoming Dividend?

It looks like Duna House Holding Nyrt. (BUSE:DUNAHOUSE) is about to go ex-dividend in the next 3 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. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. In other words, investors can purchase Duna House Holding Nyrt's shares before the 3rd of July in order to be eligible for the dividend, which will be paid on the 11th of July.

The company's next dividend payment will be Ft021.81 per share, and in the last 12 months, the company paid a total of Ft43.60 per share. Calculating the last year's worth of payments shows that Duna House Holding Nyrt has a trailing yield of 4.6% on the current share price of Ft0952.00. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to check whether the dividend payments are covered, and if earnings are growing.

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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. Duna House Holding Nyrt paid out 71% of its earnings to investors last year, a normal payout level for most businesses. A useful secondary check can be to evaluate whether Duna House Holding Nyrt generated enough free cash flow to afford its dividend. Over the past year it paid out 117% of its free cash flow as dividends, which is uncomfortably high. We're curious about why the company paid out more cash than it generated last year, since this can be one of the early signs that a dividend may be unsustainable.

Duna House Holding Nyrt paid out less in dividends than it reported in profits, but unfortunately it didn't generate enough cash to cover the dividend. Were this to happen repeatedly, this would be a risk to Duna House Holding Nyrt's ability to maintain its dividend.

Check out our latest analysis for Duna House Holding Nyrt

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. For this reason, we're glad to see Duna House Holding Nyrt's earnings per share have risen 16% per annum over the last five years. Earnings have been growing at a decent rate, but we're concerned dividend payments consumed most of the company's cash flow over the past year.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past five years, Duna House Holding Nyrt has increased its dividend at approximately 27% a year on average. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

The Bottom Line

Should investors buy Duna House Holding Nyrt for the upcoming dividend? Earnings per share growth is a positive, and the company's payout ratio looks normal. However, we note Duna House Holding Nyrt paid out a much higher percentage of its free cash flow, which makes us uncomfortable. While it does have some good things going for it, we're a bit ambivalent and it would take more to convince us of Duna House Holding Nyrt's dividend merits.

So if you want to do more digging on Duna House Holding Nyrt, you'll find it worthwhile knowing the risks that this stock faces. For example - Duna House Holding Nyrt has 3 warning signs we think you should be aware of.

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.