Hapag-Lloyd Aktiengesellschaft (ETR:HLAG) is about to trade ex-dividend in the next 4 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. In other words, investors can purchase Hapag-Lloyd's shares before the 2nd of May in order to be eligible for the dividend, which will be paid on the 6th of May.

The company's next dividend payment will be €8.20 per share, on the back of last year when the company paid a total of €8.20 to shareholders. Looking at the last 12 months of distributions, Hapag-Lloyd has a trailing yield of approximately 6.0% on its current stock price of €137.50. If you buy this business for its dividend, you should have an idea of whether Hapag-Lloyd's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.

We've discovered 2 warning signs about Hapag-Lloyd. View them for free.

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Hapag-Lloyd is paying out an acceptable 60% of its profit, a common payout level among most companies. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Dividends consumed 75% of the company's free cash flow last year, which is within a normal range for most dividend-paying organisations.

It's positive to see that Hapag-Lloyd's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

View our latest analysis for Hapag-Lloyd

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.XTRA:HLAG Historic Dividend April 27th 2025

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That's why it's comforting to see Hapag-Lloyd's earnings have been skyrocketing, up 46% per annum for the past five years. The current payout ratio suggests a good balance between rewarding shareholders with dividends, and reinvesting in growth. With a reasonable payout ratio, profits being reinvested, and some earnings growth, Hapag-Lloyd could have strong prospects for future increases to the dividend.

Story Continues

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, six years ago, Hapag-Lloyd has lifted its dividend by approximately 95% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

The Bottom Line

Should investors buy Hapag-Lloyd for the upcoming dividend? It's good to see earnings are growing, since all of the best dividend stocks grow their earnings meaningfully over the long run. That's why we're glad to see Hapag-Lloyd's earnings per share growing, although as we saw, the company is paying out more than half of its earnings and cashflow - 60% and 75% respectively. To summarise, Hapag-Lloyd looks okay on this analysis, although it doesn't appear a stand-out opportunity.

So while Hapag-Lloyd looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. We've identified 2 warning signs with Hapag-Lloyd (at least 1 which shouldn't be ignored), and understanding these 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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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.

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