Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Brewin Dolphin Holdings PLC (LON:BRW) is about to trade ex-dividend in the next 3 days. Ex-dividend means that investors that purchase the stock on or after the 9th of January will not receive this dividend, which will be paid on the 12th of February.
Brewin Dolphin Holdings's next dividend payment will be UK£0.12 per share, and in the last 12 months, the company paid a total of UK£0.16 per share. Based on the last year's worth of payments, Brewin Dolphin Holdings has a trailing yield of 4.4% on the current stock price of £3.698. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. We need to see whether the dividend is covered by earnings and if it's 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. Brewin Dolphin Holdings paid out 96% of its earnings, which is more than we're comfortable with, unless there are mitigating circumstances.
Generally, the higher a company's payout ratio, the more the dividend is at risk of being reduced.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings fall far enough, the company could be forced to cut its dividend. That's why it's comforting to see Brewin Dolphin Holdings's earnings have been skyrocketing, up 53% per annum for the past five years.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Brewin Dolphin Holdings has delivered an average of 8.7% per year annual increase in its dividend, based on the past ten years of dividend payments. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.
Is Brewin Dolphin Holdings an attractive dividend stock, or better left on the shelf? Brewin Dolphin Holdings has been generating credible earnings per share growth, although its dividend payments were not adequately covered by earnings. In sum this is a middling combination, and we find it hard to get excited about the company from a dividend perspective.
Wondering what the future holds for Brewin Dolphin Holdings? See what the six analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned.
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