Yahoo Finance Is It Worth Considering M&G Credit Income Investment Trust plc (LON:MGCI) 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 M&G Credit Income Investment Trust plc (LON:MGCI) is about to go ex-dividend in just 4 days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order 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 M&G Credit Income Investment Trust's shares before the 2nd of November in order to be eligible for the dividend, which will be paid on the 24th of November.
The company's next dividend payment will be UK£0.021 per share. Last year, in total, the company distributed UK£0.053 to shareholders. Based on the last year's worth of payments, M&G Credit Income Investment Trust has a trailing yield of 5.9% on the current stock price of £0.908. 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! We need to see whether the dividend is covered by earnings and if it's growing.
View our latest analysis for M&G Credit Income Investment Trust
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. M&G Credit Income Investment Trust distributed an unsustainably high 147% of its profit as dividends to shareholders last year. Without extenuating circumstances, we'd consider the dividend at risk of a cut.
When the dividend payout ratio is high, as it is in this case, the dividend is usually at greater risk of being cut in the future.
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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Fortunately for readers, M&G Credit Income Investment Trust's earnings per share have been growing at 11% a year for 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. Since the start of our data, four years ago, M&G Credit Income Investment Trust has lifted its dividend by approximately 26% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.
To Sum It Up
Should investors buy M&G Credit Income Investment Trust for the upcoming dividend? It's been growing earnings per share at a pleasant rate, although its dividend payout was not well covered by earnings. We think there are likely better opportunities out there.
With that being said, if dividends aren't your biggest concern with M&G Credit Income Investment Trust, you should know about the other risks facing this business. Every company has risks, and we've spotted 2 warning signs for M&G Credit Income Investment Trust (of which 1 is concerning!) you should know about.
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.
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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.
