It Might Not Be A Great Idea To Buy Greencoat Renewables PLC (ISE:GRP) For Its Next Dividend
Greencoat Renewables PLC (ISE:GRP) stock is about to trade ex-dividend in 3 days. The ex-dividend date is commonly two business days before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. 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. Therefore, if you purchase Greencoat Renewables' shares on or after the 20th of August, you won't be eligible to receive the dividend, when it is paid on the 14th of September.
The company's upcoming dividend is €0.017025 a share, following on from the last 12 months, when the company distributed a total of €0.068 per share to shareholders. Looking at the last 12 months of distributions, Greencoat Renewables has a trailing yield of approximately 8.7% on its current stock price of €0.784. 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.
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. Greencoat Renewables paid a dividend last year despite being unprofitable. This might be a one-off event, but it's not a sustainable state of affairs in the long run.
See our latest analysis for Greencoat Renewables
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
When earnings decline, dividend companies become much harder to analyse and own safely. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Greencoat Renewables reported a loss last year, and the general trend suggests its earnings have also been declining in recent years, making us wonder if the dividend is at risk.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last nine years, Greencoat Renewables has lifted its dividend by approximately 1.4% a year on average.
Remember, you can always get a snapshot of Greencoat Renewables's financial health, by checking our visualisation of its financial health, here.
Final Takeaway
Is Greencoat Renewables worth buying for its dividend? It's definitely not great to see that it paid a dividend despite reporting a loss last year. Worse, the general trend in its earnings looks negative in recent times. This is not an overtly appealing combination of characteristics, and we're just not that interested in this company's dividend.
With that being said, if you're still considering Greencoat Renewables as an investment, you'll find it beneficial to know what risks this stock is facing. For example - Greencoat Renewables has 2 warning signs we think you should be aware of.
A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield 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.