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Mattioli Woods (LON:MTW) Could Be A Buy For Its Upcoming Dividend

Simply Wall St

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Mattioli Woods plc (LON:MTW) is about to go ex-dividend in just four days. You will need to purchase shares before the 10th of September to receive the dividend, which will be paid on the 23rd of October.

Mattioli Woods's next dividend payment will be UK£0.13 per share, on the back of last year when the company paid a total of UK£0.20 to shareholders. Based on the last year's worth of payments, Mattioli Woods has a trailing yield of 2.8% on the current stock price of £7.05. 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 investigate whether Mattioli Woods can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Mattioli Woods

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. Mattioli Woods paid out more than half (53%) of its earnings last year, which is a regular payout ratio for most companies.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

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

historic-dividend
historic-dividend

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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Fortunately for readers, Mattioli Woods's earnings per share have been growing at 14% a year for the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Mattioli Woods has delivered 18% dividend growth per year on average over the past 10 years. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

Final Takeaway

Has Mattioli Woods got what it takes to maintain its dividend payments? Mattioli Woods has an acceptable payout ratio and its earnings per share have been improving at a decent rate. In summary, Mattioli Woods appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

In light of that, while Mattioli Woods has an appealing dividend, it's worth knowing the risks involved with this stock. For example, we've found 1 warning sign for Mattioli Woods that we recommend you consider before investing in the business.

We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting 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@simplywallst.com.