Yahoo Finance Why You Might Be Interested In Touchstar plc (LON:TST) For Its Upcoming Dividend
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 Touchstar plc (LON:TST) is about to go ex-dividend in just three days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Thus, you can purchase Touchstar's shares before the 9th of November in order to receive the dividend, which the company will pay on the 8th of December.
The company's next dividend payment will be UK£0.01 per share, on the back of last year when the company paid a total of UK£0.02 to shareholders. Calculating the last year's worth of payments shows that Touchstar has a trailing yield of 2.2% on the current share price of £0.9. 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 Touchstar can afford its dividend, and if the dividend could grow.
Check out our latest analysis for Touchstar
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Touchstar has a low and conservative payout ratio of just 13% of its income after tax.
Click here to see how much of its profit Touchstar paid out over the last 12 months.
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. That's why it's comforting to see Touchstar's earnings have been skyrocketing, up 86% per annum for the past five years. Touchstar earnings per share have been sprinting ahead like the Road Runner at a track and field day; scarcely stopping even for a cheeky "beep-beep". We also like that it is reinvesting most of its profits in its business.'
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, 10 years ago, Touchstar has lifted its dividend by approximately 2.3% a year on average. Earnings per share have been growing much quicker than dividends, potentially because Touchstar is keeping back more of its profits to grow the business.
The Bottom Line
Has Touchstar got what it takes to maintain its dividend payments? Companies like Touchstar that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. In summary, Touchstar appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.
On that note, you'll want to research what risks Touchstar is facing. Our analysis shows 1 warning sign for Touchstar and you should be aware of this before buying any shares.
Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.
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.
