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Sabre Insurance Group plc (LON:SBRE) is about to trade ex-dividend in the next 3 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 because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. In other words, investors can purchase Sabre Insurance Group's shares before the 17th of August in order to be eligible for the dividend, which will be paid on the 20th of September.
The company's next dividend payment will be UK£0.009 per share. Last year, in total, the company distributed UK£0.045 to shareholders. Looking at the last 12 months of distributions, Sabre Insurance Group has a trailing yield of approximately 3.0% on its current stock price of £1.51. If you buy this business for its dividend, you should have an idea of whether Sabre Insurance Group's dividend is reliable and sustainable. As a result, readers should always check whether Sabre Insurance Group has been able to grow its dividends, or if the dividend might be cut.
Check out our latest analysis for Sabre Insurance Group
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Its dividend payout ratio is 89% of profit, which means the company is paying out a majority of its earnings. The relatively limited profit reinvestment could slow the rate of future earnings growth. We'd be worried about the risk of a drop in earnings.
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.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
When earnings decline, dividend companies become much harder to analyse and own safely. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Sabre Insurance Group's earnings per share have fallen at approximately 27% a year over the previous five years. When earnings per share fall, the maximum amount of dividends that can be paid also falls.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Sabre Insurance Group's dividend payments per share have declined at 21% per year on average over the past five years, which is uninspiring. While it's not great that earnings and dividends per share have fallen in recent years, we're encouraged by the fact that management has trimmed the dividend rather than risk over-committing the company in a risky attempt to maintain yields to shareholders.