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RELX PLC (LON:REL) stock is about to trade ex-dividend in 4 days. The ex-dividend date is commonly two business days before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. Meaning, you will need to purchase RELX's shares before the 8th of May to receive the dividend, which will be paid on the 19th of June.
The company's upcoming dividend is UK£0.448 a share, following on from the last 12 months, when the company distributed a total of UK£0.63 per share to shareholders. Looking at the last 12 months of distributions, RELX has a trailing yield of approximately 1.5% on its current stock price of UK£41.21. If you buy this business for its dividend, you should have an idea of whether RELX's dividend is reliable and sustainable. As a result, readers should always check whether RELX has been able to grow its dividends, or if the dividend might be cut.
We've discovered 2 warning signs about RELX. View them for free.
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. RELX paid out more than half (61%) of its earnings last year, which is a regular payout ratio for most companies. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Dividends consumed 53% of the company's free cash flow last year, which is within a normal range for most dividend-paying organisations.
It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
Check out our latest analysis for RELX
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
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 earnings fall far enough, the company could be forced to cut its dividend. With that in mind, we're encouraged by the steady growth at RELX, with earnings per share up 6.3% on average over the last five years. Decent historical earnings per share growth suggests RELX has been effectively growing value for shareholders. However, it's now paying out more than half its earnings as dividends. Therefore it's unlikely that the company will be able to reinvest heavily in its business, which could presage slower growth in the future.