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Young & Co.'s Brewery, P.L.C. (LON:YNGA) stock is about to trade ex-dividend in three days. The ex-dividend date is one business day 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 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 Young's Brewery's shares before the 23rd of November in order to be eligible for the dividend, which will be paid on the 8th of December.
The company's upcoming dividend is UK£0.11 a share, following on from the last 12 months, when the company distributed a total of UK£0.22 per share to shareholders. Based on the last year's worth of payments, Young's Brewery stock has a trailing yield of around 2.0% on the current share price of £10.95. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Young's Brewery has been able to grow its dividends, or if the dividend might be cut.
See our latest analysis for Young's Brewery
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. Fortunately Young's Brewery's payout ratio is modest, at just 44% of profit. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. Fortunately, it paid out only 45% of its free cash flow in the past year.
It's positive to see that Young's Brewery's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.
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. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That's why it's not ideal to see Young's Brewery's earnings per share have been shrinking at 4.9% a year over the previous five years.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Young's Brewery has delivered 4.0% dividend growth per year on average over the past 10 years.