Readers hoping to buy Global Indemnity Group, LLC (NASDAQ:GBLI) 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 24th of September in order to receive the dividend, which the company will pay on the 30th of September.
Global Indemnity Group's upcoming dividend is US$0.25 a share, following on from the last 12 months, when the company distributed a total of US$1.00 per share to shareholders. Last year's total dividend payments show that Global Indemnity Group has a trailing yield of 4.3% on the current share price of $23.46. If you buy this business for its dividend, you should have an idea of whether Global Indemnity Group's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. That's why it's good to see Global Indemnity Group paying out a modest 50% of its earnings.
Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.
Have Earnings And Dividends Been Growing?
Companies with falling earnings are riskier for dividend shareholders. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. So we're not too excited that Global Indemnity Group's earnings are down 4.2% a year over the past five years.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Global Indemnity Group's dividend payments are broadly unchanged compared to where they were three years ago. If a company's dividend stays flat while earnings are in decline, this is typically a sign that it is paying out a larger percentage of its earnings. This can become unsustainable if earnings fall far enough.
To Sum It Up
Is Global Indemnity Group an attractive dividend stock, or better left on the shelf? Global Indemnity Group's earnings per share are down over the past five years, although it has the cushion of a low payout ratio, which would suggest a cut to the dividend is relatively unlikely. We're unconvinced on the company's merits, and think there might be better opportunities out there.
If you want to look further into Global Indemnity Group, it's worth knowing the risks this business faces. Our analysis shows 2 warning signs for Global Indemnity Group that we strongly recommend you have a look at before investing in the company.
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.
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