MedservRegis p.l.c. (MTSE:MDS) Looks Like A Good Stock, And It's Going Ex-Dividend Soon
It looks like MedservRegis p.l.c. (MTSE:MDS) is about to go ex-dividend in the next 2 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 of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. In other words, investors can purchase MedservRegis' shares before the 30th of October in order to be eligible for the dividend, which will be paid on the 27th of November.
The company's upcoming dividend is €0.014758 a share, following on from the last 12 months, when the company distributed a total of €0.025 per share to shareholders. Looking at the last 12 months of distributions, MedservRegis has a trailing yield of approximately 5.3% on its current stock price of €0.56. 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.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. MedservRegis paid out 56% of its earnings to investors last year, a normal payout level for most businesses. A useful secondary check can be to evaluate whether MedservRegis generated enough free cash flow to afford its dividend. It paid out 12% of its free cash flow as dividends last year, which is conservatively low.
It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
See our latest analysis for MedservRegis
Click here to see how much of its profit MedservRegis paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. It's encouraging to see MedservRegis has grown its earnings rapidly, up 77% a year 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, MedservRegis could have strong prospects for future increases to the dividend.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. MedservRegis has delivered 14% dividend growth per year on average over the past three years. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.
To Sum It Up
Is MedservRegis an attractive dividend stock, or better left on the shelf? We like MedservRegis's growing earnings per share and the fact that - while its payout ratio is around average - it paid out a lower percentage of its cash flow. MedservRegis looks solid on this analysis overall, and we'd definitely consider investigating it more closely.
On that note, you'll want to research what risks MedservRegis is facing. Every company has risks, and we've spotted 4 warning signs for MedservRegis (of which 1 is concerning!) you should know about.
If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.
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