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Glencore plc (LON:GLEN) Goes Ex-Dividend Soon

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·3 min read
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Readers hoping to buy Glencore plc (LON:GLEN) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. You can purchase shares before the 22nd of April in order to receive the dividend, which the company will pay on the 21st of May.

Glencore's next dividend payment will be US$0.06 per share. Last year, in total, the company distributed US$0.12 to shareholders. Based on the last year's worth of payments, Glencore stock has a trailing yield of around 2.9% on the current share price of £3.02. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Glencore has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Glencore

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Glencore reported a loss after tax last year, which means it's paying a dividend despite being unprofitable. While this might be a one-off event, this is unlikely to be sustainable in the long term. Glencore paid a dividend despite reporting negative free cash flow last year. That's typically a bad combination and - if this were more than a one-off - not sustainable.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

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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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Glencore was unprofitable last year, but at least the general trend suggests its earnings have 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.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Glencore has delivered 1.8% dividend growth per year on average over the past 10 years.

Get our latest analysis on Glencore's balance sheet health here.

To Sum It Up

From a dividend perspective, should investors buy or avoid Glencore? It doesn't appear an outstanding opportunity, but could be worth a closer look.

If you're not too concerned about Glencore's ability to pay dividends, you should still be mindful of some of the other risks that this business faces. We've identified 2 warning signs with Glencore (at least 1 which doesn't sit too well with us), and understanding these should be part of your investment process.

If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.

This article by Simply Wall St is general in nature. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.