Only 3 Days Left To Cash In On Hipgnosis Songs Fund Limited's (LON:SONG) Dividend
Hipgnosis Songs Fund Limited (LON:SONG) stock is about to trade ex-dividend in 3 days time. You will need to purchase shares before the 30th of January to receive the dividend, which will be paid on the 21st of February.
Hipgnosis Songs Fund's next dividend payment will be UK£0.013 per share, on the back of last year when the company paid a total of UK£0.05 to shareholders. Looking at the last 12 months of distributions, Hipgnosis Songs Fund has a trailing yield of approximately 4.6% on its current stock price of £1.09. 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! That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
See our latest analysis for Hipgnosis Songs Fund
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Hipgnosis Songs Fund paid out 193% of profit in the past year, which we think is typically not sustainable unless there are mitigating characteristics such as unusually strong cash flow or a large cash balance.
Generally, the higher a company's payout ratio, the more the dividend is at risk of being reduced.
Click here to see how much of its profit Hipgnosis Songs Fund paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If earnings fall far enough, the company could be forced to cut its dividend.
We'd also point out that Hipgnosis Songs Fund issued a meaningful number of new shares in the past year. It's hard to grow dividends per share when a company keeps creating new shares.
Given that Hipgnosis Songs Fund has only been paying a dividend for a year, there's not much of a past history to draw insight from.
Final Takeaway
From a dividend perspective, should investors buy or avoid Hipgnosis Songs Fund? Hipgnosis Songs Fund's earnings have barely moved in recent times, and the company is paying out a disagreeably high percentage of its earnings; a mediocre combination. Hipgnosis Songs Fund doesn't appear to have a lot going for it, and we're not inclined to take a risk on owning it for the dividend.
Want to learn more about Hipgnosis Songs Fund? Here's a visualisation of its historical rate of revenue and earnings growth.
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.
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