Yahoo Finance Interested In EJF Investments' (LON:EJFI) Upcoming UK£0.027 Dividend? You Have Four Days Left
Readers hoping to buy EJF Investments Limited (LON:EJFI) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. 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 EJF Investments' shares before the 4th of May in order to be eligible for the dividend, which will be paid on the 31st of May.
The company's next dividend payment will be UK£0.027 per share, on the back of last year when the company paid a total of UK£0.11 to shareholders. Looking at the last 12 months of distributions, EJF Investments has a trailing yield of approximately 8.9% on its current stock price of £1.205. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to check whether the dividend payments are covered, and if earnings are growing.
Check out our latest analysis for EJF Investments
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. EJF Investments paid out a comfortable 46% of its profit last year.
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 EJF Investments paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Companies with falling earnings are riskier for dividend shareholders. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. So we're not too excited that EJF Investments's earnings are down 3.0% a year over the past five years.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. EJF Investments has delivered an average of 1.8% per year annual increase in its dividend, based on the past six years of dividend payments.
To Sum It Up
Is EJF Investments worth buying for its dividend? Earnings per share have shrunk noticeably in recent years, although we like that the company has a low payout ratio. This could suggest a cut to the dividend may not be a major risk in the near future. We think there are likely better opportunities out there.
If you're not too concerned about EJF Investments's ability to pay dividends, you should still be mindful of some of the other risks that this business faces. For example, EJF Investments has 3 warning signs (and 1 which is concerning) we think you should know about.
A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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