Yahoo Finance Should You Buy Personal Group Holdings Plc (LON:PGH) For Its Upcoming Dividend In 3 Days?
Personal Group Holdings Plc (LON:PGH) stock is about to trade ex-dividend in 3 days time. Investors can purchase shares before the 7th of November in order to be eligible for this dividend, which will be paid on the 13th of December.
Personal Group Holdings's next dividend payment will be UK£0.06 per share, on the back of last year when the company paid a total of UK£0.2 to shareholders. Last year's total dividend payments show that Personal Group Holdings has a trailing yield of 6.8% on the current share price of £3.45. 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! As a result, readers should always check whether Personal Group Holdings has been able to grow its dividends, or if the dividend might be cut.
View our latest analysis for Personal Group Holdings
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. It paid out 82% of its earnings as dividends last year, which is not unreasonable, but limits reinvestment in the business and leaves the dividend vulnerable to a business downturn. We'd be worried about the risk of a drop in earnings.
When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.
Click here to see how much of its profit Personal Group Holdings paid out over the last 12 months.
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. That's why it's comforting to see Personal Group Holdings's earnings have been skyrocketing, up 32% per annum for the past five years.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last ten years, Personal Group Holdings has lifted its dividend by approximately 5.8% a year on average. It's good to see both earnings and the dividend have improved - although the former has been rising much quicker than the latter, possibly due to the company reinvesting more of its profits in growth.
The Bottom Line
From a dividend perspective, should investors buy or avoid Personal Group Holdings? Earnings per share are growing nicely, and Personal Group Holdings is paying out a percentage of its earnings that is around the average for dividend-paying stocks. In summary, Personal Group Holdings appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.
Keen to explore more data on Personal Group Holdings's financial performance? Check out our visualisation of its historical revenue and earnings growth.
We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
