In This Article:
It looks like Caledonia Investments Plc (LON:CLDN) is about to go ex-dividend in the next three days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Therefore, if you purchase Caledonia Investments' shares on or after the 5th of December, you won't be eligible to receive the dividend, when it is paid on the 9th of January.
The company's next dividend payment will be UK£0.1969 per share. Last year, in total, the company distributed UK£0.70 to shareholders. Calculating the last year's worth of payments shows that Caledonia Investments has a trailing yield of 2.1% on the current share price of UK£33.70. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to check whether the dividend payments are covered, and if earnings are growing.
See our latest analysis for Caledonia Investments
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. Caledonia Investments paid out a comfortable 36% of its profit last year.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
Click here to see how much of its profit Caledonia Investments paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
When earnings decline, dividend companies become much harder to analyse and own safely. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. With that in mind, we're discomforted by Caledonia Investments's 11% per annum decline in earnings in the past five years. Such a sharp decline casts doubt on the future sustainability of the dividend.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Caledonia Investments has delivered an average of 3.7% per year annual increase in its dividend, based on the past 10 years of dividend payments.
The Bottom Line
Is Caledonia Investments worth buying for its dividend? Earnings per share have shrunk noticeably in recent years, although we like that the company has a low payout ratio. This could suggest a cut to the dividend may not be a major risk in the near future. We think there are likely better opportunities out there.