Xior Student Housing Nv (EBR:XIOR) cover image
45 Reads (3 mins read)

Will Xior Student Housing Nv (EBR:XIOR) have to cut its dividend payment?

22nd May by Ben Hobson

Dividend yields are often credited with providing a floor under a share price and reducing its volatility - but when those dividends get cut, the implications for shareholders are painful.

Thankfully there are some warning signs that point to an upcoming dividend cut and allow us as investors to get out ahead of time. Going through these measures and applying them to Xior Student Housing Nv (EBR:XIOR), which pays a 0.49 rolling dividend, shows that shareholders ought to be seriously concerned about the sustainability of its dividend...

GET MORE DATA-DRIVEN INSIGHTS INTO EBR:XIOR »

Evaluating Xior Student Housing Nv (EBR:XIOR)'s balance sheet strength

A leveraged company with high levels of debt to equity that struggles to meet its short-term liabilities is more likely to cut its dividend than a well-financed one. A safe level of net gearing (net debt to equity) on the balance sheet is generally considered to be 50 percent or less. Xior Student Housing Nv’s net gearing ratio is 86.8% - above the 50% threshold.

The current ratio (current assets / current liabilities ) is another balance sheet ratio that focuses more on a company’s capacity to service short term debts. A current ratio of less than one can be cause for concern, but here we set the limit at less than 1.0x. Xior Student Housing Nv’s current ratio is 0.38.

Does Xior Student Housing Nv generate enough cash?

A dividend-paying stock is often regarded as having a certain level of quality because it is assumed to generate adequate cash from operations to pay said dividend. This is not always the case though - companies that feel compelled to pay a dividend they can no longer afford often increase net debt and use cash sub-optimally just to avoid a dividend cut.

Shareholders can check if this might be the case by comparing Free Cashflows Per Share (FCF PS) with the Dividend Per Share (DPS). Xior Student Housing Nv generated -2.53 in FCF PS. This is lower than the dividend payout 0.49 and indicates that the company has not generated enough FCF to cover dividends over the past twelve months.

A look at Xior Student Housing Nv (EBR:XIOR)’s dividend cover

Dividend cover is perhaps the most widely interpreted dividend health metric. It is computed by dividing earnings per share divided by dividend per share (EPS/DPS) and, generally speaking, dividend cover of less than 1.5x earnings should be a flag for further investigation.

  • The rolling dividend cover for Xior Student Housing Nv, based on projected dividends and earnings, is 0.92.
  • The historic dividend cover is based on historic dividends and earnings. Xior Student Housing Nv’s historic dividend cover is 0.50.

Both of these figures are below the 1.0x safety threshold for Xior Student Housing Nv that we have set. This suggests that the dividend could be at risk.

Income investing: what you need to know

For many investors, dividends are a vital part of their long-term strategy. That's why we have created a variety of income-focused stock screens, such as the Best Dividends Screen, to identify promising candidates for income portfolios. Take a look and see if any of the qualifying stocks might be worthy of further research.

As for Xior Student Housing Nv (EBR:XIOR), you can find a wealth of financial data on the group's StockReport, including information on the group's past and forecast dividend payments. If you’d like to discover more about dividend investing, you can read our free ebook: How to Make Money in Dividend Stocks.

Share this article
As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested.
Share Price
€44.15
Change Today
0.11%
Xior Student Housing Nv ( )

Stockopedia is here to help individual investors beat the markets by being the very best in stock analysis, research & community. Take a 30 day free trial of our extensive multi-award winning service and find out why more than ten thousand global investors can't live without it.

© Stockopedia 2020, Refinitiv, Share Data Services.
This site cannot substitute for professional investment advice or independent factual verification. To use it, you must accept our Terms of Use, Privacy and Disclaimer policies.