Yahoo Finance Why It Might Not Make Sense To Buy Rights and Issues Investment Trust Public Limited Company (LON:RIII) For Its Upcoming Dividend
It looks like Rights and Issues Investment Trust Public Limited Company (LON:RIII) is about to go ex-dividend in the next two days. 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. 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. In other words, investors can purchase Rights and Issues Investment Trust's shares before the 24th of August in order to be eligible for the dividend, which will be paid on the 25th of September.
The company's next dividend payment will be UK£0.12 per share, and in the last 12 months, the company paid a total of UK£0.41 per share. Calculating the last year's worth of payments shows that Rights and Issues Investment Trust has a trailing yield of 2.2% on the current share price of £18.3. 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 check whether the dividend payments are covered, and if earnings are growing.
Check out our latest analysis for Rights and Issues Investment Trust
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. Rights and Issues Investment Trust reported a loss after tax last year, which means it's paying a dividend despite being unprofitable. While this might be a one-off event, this is unlikely to be sustainable in the long term.
Have Earnings And Dividends Been Growing?
Companies with falling earnings are riskier for dividend shareholders. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Rights and Issues Investment Trust reported a loss last year, and the general trend suggests its earnings have also been declining in recent years, making us wonder if the dividend is at risk.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Since the start of our data, 10 years ago, Rights and Issues Investment Trust has lifted its dividend by approximately 4.4% a year on average.
Remember, you can always get a snapshot of Rights and Issues Investment Trust's financial health, by checking our visualisation of its financial health, here.
The Bottom Line
Is Rights and Issues Investment Trust worth buying for its dividend? First, it's not great to see the company paying a dividend despite being loss-making over the last year. Worse, the general trend in its earnings looks negative in recent years. This is not an overtly appealing combination of characteristics, and we're just not that interested in this company's dividend.
Although, if you're still interested in Rights and Issues Investment Trust and want to know more, you'll find it very useful to know what risks this stock faces. Case in point: We've spotted 2 warning signs for Rights and Issues Investment Trust you should be aware of.
If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.
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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.
