Yahoo Finance Be Sure To Check Out Games Workshop Group PLC (LON:GAW) Before It Goes Ex-Dividend
Games Workshop Group PLC (LON:GAW) is about to trade ex-dividend in the next 3 days. Investors can purchase shares before the 25th of March in order to be eligible for this dividend, which will be paid on the 30th of April.
Games Workshop Group's next dividend payment will be UK£0.45 per share, and in the last 12 months, the company paid a total of UK£1.85 per share. Looking at the last 12 months of distributions, Games Workshop Group has a trailing yield of approximately 1.9% on its current stock price of £95.5. 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 investigate whether Games Workshop Group can afford its dividend, and if the dividend could grow.
View our latest analysis for Games Workshop Group
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Games Workshop Group paid out more than half (54%) of its earnings last year, which is a regular payout ratio for most companies. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. It distributed 42% of its free cash flow as dividends, a comfortable payout level for most companies.
It's positive to see that Games Workshop Group's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.
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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That's why it's comforting to see Games Workshop Group's earnings have been skyrocketing, up 51% per annum for the past five years. Management appears to be striking a nice balance between reinvesting for growth and paying dividends to shareholders. With a reasonable payout ratio, profits being reinvested, and some earnings growth, Games Workshop Group could have strong prospects for future increases to the dividend.
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 22% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.
Final Takeaway
Should investors buy Games Workshop Group for the upcoming dividend? Games Workshop Group's growing earnings per share and conservative payout ratios make for a decent combination. We also like that it paid out a lower percentage of its cash flow. Games Workshop Group looks solid on this analysis overall, and we'd definitely consider investigating it more closely.
In light of that, while Games Workshop Group has an appealing dividend, it's worth knowing the risks involved with this stock. For example, we've found 2 warning signs for Games Workshop Group that we recommend you consider before investing in the business.
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.
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. 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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