Yahoo Finance Just Three Days Till Games Workshop Group PLC (LON:GAW) Will Be Trading Ex-Dividend
Games Workshop Group PLC (LON:GAW) is about to trade ex-dividend in the next three 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. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Accordingly, Games Workshop Group investors that purchase the stock on or after the 4th of August will not receive the dividend, which will be paid on the 12th of September.
The company's upcoming dividend is UK£0.90 a share, following on from the last 12 months, when the company distributed a total of UK£1.65 per share to shareholders. Looking at the last 12 months of distributions, Games Workshop Group has a trailing yield of approximately 2.1% on its current stock price of £77.45. If you buy this business for its dividend, you should have an idea of whether Games Workshop Group's dividend is reliable and sustainable. As a result, readers should always check whether Games Workshop Group has been able to grow its dividends, or if the dividend might be cut.
View our latest analysis for Games Workshop Group
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Games Workshop Group paid out a comfortable 42% of its profit last year. A useful secondary check can be to evaluate whether Games Workshop Group generated enough free cash flow to afford its dividend. The company paid out 105% of its free cash flow over the last year, which we think is outside the ideal range for most businesses. Cash flows are usually much more volatile than earnings, so this could be a temporary effect - but we'd generally want to look more closely here.
While Games Workshop Group's dividends were covered by the company's reported profits, cash is somewhat more important, so it's not great to see that the company didn't generate enough cash to pay its dividend. Cash is king, as they say, and were Games Workshop Group to repeatedly pay dividends that aren't well covered by cashflow, we would consider this a warning sign.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
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. It's encouraging to see Games Workshop Group has grown its earnings rapidly, up 33% a year for the past five years. Earnings have been growing quickly, but we're concerned dividend payments consumed most of the company's cash flow over the past year.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, 10 years ago, Games Workshop Group has lifted its dividend by approximately 10% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.
Final Takeaway
Is Games Workshop Group worth buying for its dividend? We like that Games Workshop Group has been successfully growing its earnings per share at a nice rate and reinvesting most of its profits in the business. However, we note the high cashflow payout ratio with some concern. To summarise, Games Workshop Group looks okay on this analysis, although it doesn't appear a stand-out opportunity.
While it's tempting to invest in Games Workshop Group for the dividends alone, you should always be mindful of the risks involved. For example, we've found 2 warning signs for Games Workshop Group (1 can't be ignored!) that deserve your attention before investing in the shares.
If you're in the market for strong dividend payers, we recommend checking our selection of top 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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