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Readers hoping to buy Petershill Partners plc (LON:PHLL) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Thus, you can purchase Petershill Partners' shares before the 21st of November in order to receive the dividend, which the company will pay on the 20th of December.
The company's upcoming dividend is US$0.175 a share, following on from the last 12 months, when the company distributed a total of US$0.15 per share to shareholders. Looking at the last 12 months of distributions, Petershill Partners has a trailing yield of approximately 5.8% on its current stock price of UK£2.395. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to check whether the dividend payments are covered, and if earnings are growing.
View our latest analysis for Petershill Partners
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. That's why it's good to see Petershill Partners paying out a modest 49% of its earnings.
Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.
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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. As a result, it's definitely disappointing to see that earnings per share have declined 18% over the past year.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Petershill Partners has delivered an average of 72% per year annual increase in its dividend, based on the past three years of dividend payments.
To Sum It Up
From a dividend perspective, should investors buy or avoid Petershill Partners? Petershill Partners's earnings per share are down sharply over the last year, although we note that it is paying out a low fraction of its earnings. Ordinarily we wouldn't be too concerned about a one-year decline, but the 1,820% drop in earnings per share is enough to make us think twice. In sum this is a middling combination, and we find it hard to get excited about the company from a dividend perspective.