Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Quilter plc (LON:QLT) is about to trade ex-dividend in the next 3 days. If you purchase the stock on or after the 29th of August, you won't be eligible to receive this dividend, when it is paid on the 20th of September.
Quilter's next dividend payment will be UK£0.017 per share, on the back of last year when the company paid a total of UK£0.034 to shareholders. Last year's total dividend payments show that Quilter has a trailing yield of 2.7% on the current share price of £1.258. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether Quilter has been able to grow its dividends, or if the dividend might be cut.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Quilter paid out more than half (66%) of its earnings last year, which is a regular payout ratio for most companies.
When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.
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. That's why it's comforting to see Quilter's earnings have been skyrocketing, up 38% per annum for the past five years.
This is Quilter's first year of paying a dividend, so it doesn't have much of a history yet to compare to.
The Bottom Line
Has Quilter got what it takes to maintain its dividend payments? Quilter has an acceptable payout ratio and its earnings per share have been improving at a decent rate. Quilter ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.
Ever wonder what the future holds for Quilter? See what the six analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow
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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Thank you for reading.