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Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Octopus Renewables Infrastructure Trust plc (LON:ORIT) is about to go ex-dividend in just 3 days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Accordingly, Octopus Renewables Infrastructure Trust investors that purchase the stock on or after the 17th of August will not receive the dividend, which will be paid on the 1st of September.
The company's next dividend payment will be UK£0.015 per share. Last year, in total, the company distributed UK£0.052 to shareholders. Based on the last year's worth of payments, Octopus Renewables Infrastructure Trust has a trailing yield of 6.4% on the current stock price of £0.905. If you buy this business for its dividend, you should have an idea of whether Octopus Renewables Infrastructure Trust's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.
Check out our latest analysis for Octopus Renewables Infrastructure Trust
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. That's why it's good to see Octopus Renewables Infrastructure Trust paying out a modest 42% of its earnings.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. For that reason, it's encouraging to see Octopus Renewables Infrastructure Trust's earnings over the past year have risen 41%. While we'd be remiss not to point out that a year is a very short time in dividend investing, it's an encouraging sign so far.
One year is a very short time frame in the pantheon of investing, so we wouldn't get too hung up on these numbers.