Magellan Financial Group Limited (ASX:MFG) is scheduled to trade ex-dividend within the next two days. The ex-dividend date is typically set one business day before the record date. The record date is the deadline by which you must be listed on the company's books as a shareholder in order to receive dividends. The ex-dividend date is important because the settlement process takes two full business days. Therefore, if you miss that date, it will not be recorded on the company's books on the record date. This means you need to purchase Magellan Financial Group shares by February 20th to receive the dividend, which will be paid on March 6th.
The company's next dividend payment will be A$0.294 per share, following a total of A$0.59 paid to shareholders last year. Based on the last year's worth of payments, Magellan Financial Group stock has a yield of approximately 6.2% on the current share price of AU$9.42. If you buy this business for its dividend, you want to understand whether Magellan Financial Group's dividend is reliable and sustainable. So we need to check if the dividends are covered, and if earnings are growing.
Check out our latest analysis for Magellan Financial Group.
If a company pays out more in dividends than it earned in profit, then the dividend might become unsustainable – hardly an ideal situation. Magellan Financial Group pays an acceptable 58% of its profit, which is a common payout level for most companies.
If a company pays out less in dividends than it earned in profit, this generally suggests the dividend is affordable. The lower the percentage of profits that a company pays out, the greater the margin of safety for the dividend if the business goes into a downturn.
Click here to see the company's payout ratio and analyst estimates of its future dividends.
Are profits and dividends growing?
There is value in companies that aren't growing earnings, but if you think a company will struggle to grow, then assessing the sustainability of its dividend is even more important. If business performance is poor and dividends are reduced, corporate value may fall sharply. With that in mind, we're not pleased to see Magellan Financial Group's earnings per share have remained essentially flat over the past five years. Sure, it's better than a stock price going down, but in the long run, all the best dividend stocks can significantly increase his earnings per share.
Many investors assess a company's dividend performance by evaluating how much its dividend payments have changed over time. Since data began 10 years ago, Magellan Financial Group has raised its dividend by an average of about 19% per year.
Summary
Is Magellan Financial Group an attractive dividend stock, or should you keep it on the shelf? Earnings per share have not grown at all, and the company is distributing just over half of its profits to shareholders. These characteristics usually do not translate into good dividend performance, and investors may not be happy with the results of owning this stock for its dividend.
But with that in mind, if you're unfazed by Magellan Financial Group's poor dividend profile, it's probably worth being mindful of the risks associated with this business.Every company has risks, and we found that Two warning signs for Magellan Financial Group (One of which could be serious!) you need to know about.
Generally speaking, we don't recommend just buying the first dividend stock you see.Here it is A carefully selected list of interesting stocks with high dividends.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodologies, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.
