Interested In M&G's (LON:MNG) Upcoming UK£0.068 Dividend? You Have Three Days Left
It looks like M&G plc (LON:MNG) is about to go ex-dividend in the next 3 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. 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. Thus, you can purchase M&G's shares before the 10th of September in order to receive the dividend, which the company will pay on the 16th of October.
The company's next dividend payment will be UK£0.068 per share. Last year, in total, the company distributed UK£0.20 to shareholders. Calculating the last year's worth of payments shows that M&G has a trailing yield of 5.7% on the current share price of UK£3.574. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to check whether the dividend payments are covered, and if earnings are growing.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. M&G reported a loss last year, so it's not great to see that it has continued paying a dividend.
See our latest analysis for M&G
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 earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. M&G reported a loss last year, but at least the general trend suggests its income has been improving over the past five years. Even so, an unprofitable company whose business does not quickly recover is usually not a good candidate for dividend investors.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. M&G has delivered 9.5% dividend growth per year on average over the past six years. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.
Remember, you can always get a snapshot of M&G's financial health, by checking our visualisation of its financial health, here.
Final Takeaway
Is M&G worth buying for its dividend? We're a bit uncomfortable with it paying a dividend while being loss-making. At best we would put it on a watch-list to see if business conditions improve, as it doesn't look like a clear opportunity right now.
If you want to look further into M&G, it's worth knowing the risks this business faces. For example, we've found 1 warning sign for M&G that we recommend you consider before investing in the business.
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.