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London Stock Exchange Group plc (LON:LSEG) stock is about to trade ex-dividend in 3 days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. In other words, investors can purchase London Stock Exchange 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£0.36 per share. Last year, in total, the company distributed UK£1.11 to shareholders. Last year's total dividend payments show that London Stock Exchange Group has a trailing yield of 1.3% on the current share price of £82.7. If you buy this business for its dividend, you should have an idea of whether London Stock Exchange Group's dividend is reliable and sustainable. As a result, readers should always check whether London Stock Exchange Group has been able to grow its dividends, or if the dividend might be cut.
Check out our latest analysis for London Stock Exchange Group
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. Last year, London Stock Exchange Group paid out 92% of its income as dividends, which is above a level that we're comfortable with, especially if the company needs to reinvest in its business.
When the dividend payout ratio is high, as it is in this case, the dividend is usually at greater risk of being cut in the future.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Companies with falling earnings are riskier for dividend shareholders. If earnings fall far enough, the company could be forced to cut its dividend. That's why it's not ideal to see London Stock Exchange Group's earnings per share have been shrinking at 4.6% a year over the previous five years.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. London Stock Exchange Group has delivered an average of 14% per year annual increase in its dividend, based on the past 10 years of dividend payments. That's intriguing, but the combination of growing dividends despite declining earnings can typically only be achieved by paying out a larger percentage of profits. London Stock Exchange Group is already paying out a high percentage of its income, so without earnings growth, we're doubtful of whether this dividend will grow much in the future.