UK markets close in 4 hours 10 minutes
  • FTSE 100

    5,819.06
    -70.16 (-1.19%)
     
  • FTSE 250

    17,826.88
    -102.32 (-0.57%)
     
  • AIM

    970.11
    -2.83 (-0.29%)
     
  • GBP/EUR

    1.1005
    +0.0061 (+0.56%)
     
  • GBP/USD

    1.3054
    +0.0107 (+0.83%)
     
  • BTC-GBP

    9,360.69
    +826.35 (+9.68%)
     
  • CMC Crypto 200

    245.56
    +6.65 (+2.78%)
     
  • S&P 500

    3,443.12
    +16.20 (+0.47%)
     
  • DOW

    28,308.79
    +113.37 (+0.40%)
     
  • CRUDE OIL

    40.98
    -0.72 (-1.73%)
     
  • GOLD FUTURES

    1,922.40
    +7.00 (+0.37%)
     
  • NIKKEI 225

    23,639.46
    +72.42 (+0.31%)
     
  • HANG SENG

    24,754.42
    +184.88 (+0.75%)
     
  • DAX

    12,641.29
    -95.66 (-0.75%)
     
  • CAC 40

    4,882.76
    -46.52 (-0.94%)
     

We Wouldn't Be Too Quick To Buy The Scottish Investment Trust PLC (LON:SCIN) Before It Goes Ex-Dividend

Simply Wall St
·3-min read

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 The Scottish Investment Trust PLC (LON:SCIN) is about to go ex-dividend in just four days. You can purchase shares before the 1st of October in order to receive the dividend, which the company will pay on the 2nd of November.

Scottish Investment Trust's next dividend payment will be UK£0.057 per share. Last year, in total, the company distributed UK£0.31 to shareholders. Calculating the last year's worth of payments shows that Scottish Investment Trust has a trailing yield of 4.4% on the current share price of £7.09. 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! That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

View our latest analysis for Scottish Investment Trust

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Scottish Investment Trust's dividend is not well covered by earnings, as the company lost money last year. This is not a sustainable state of affairs, so it would be worth investigating if earnings are expected to recover.

Click here to see how much of its profit Scottish Investment Trust paid out over the last 12 months.

historic-dividend
historic-dividend

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Scottish 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.

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, Scottish Investment Trust has lifted its dividend by approximately 13% a year on average.

Get our latest analysis on Scottish Investment Trust's balance sheet health here.

The Bottom Line

From a dividend perspective, should investors buy or avoid Scottish Investment Trust? It's definitely not great to see that it paid a dividend despite reporting a loss last year. Worse, the general trend in its earnings looks negative in recent times. These characteristics don't generally lead to outstanding dividend performance, and investors may not be happy with the results of owning this stock for its dividend.

With that in mind though, if the poor dividend characteristics of Scottish Investment Trust don't faze you, it's worth being mindful of the risks involved with this business. To help with this, we've discovered 3 warning signs for Scottish Investment Trust (2 are concerning!) that you ought to be aware of before buying the shares.

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.