Some investors rely on dividends to grow their wealth, and if you’re one of those dividend sleuths, you might be intrigued to know that Vistry SA Group (LON: VTY) is set to be ex-dividend in just 3 days. The ex-dividend date is one working day before the registration date, which is the deadline by which shareholders must be present on the books of the company to be eligible for a dividend payment. The ex-dividend date is important because every time a stock is bought or sold, the transaction takes at least two business days to settle. As a result, investors in the Vistry group who buy the shares from October 7 will not receive the dividend, which will be paid on November 19.
The company’s next dividend payment will be £ 0.20 per share, and over the past 12 months the company has paid a total of £ 0.40 per share. Looking at the last 12 months of distributions, Vistry Group has a rolling return of around 3.3% on its current price of £ 12.005. Dividends are an important source of income for many shareholders, but the health of the business is critical to sustaining those dividends. It is therefore necessary to check whether dividend payments are covered and whether profits are growing.
See our latest review for Vistry Group
Dividends are generally paid out of company profits. If a company pays more dividends than it made a profit, then the dividend could be unsustainable. That’s why it’s great to see Vistry Group donate a modest 42% of its profits. Having said that, even very profitable companies can sometimes not generate enough cash to pay the dividend, which is why we always need to check if the dividend is covered by the cash flow. The good thing is that dividends were well covered by free cash flow, with the company paying 14% of its cash flow last year.
It is positive to see that the Vistry Group dividend is covered by both earnings and cash flow, as this is usually a sign that the dividend is sustainable, and a lower payout ratio usually suggests a larger margin. security before the dividend is cut.
Click here to view the company’s payout ratio, as well as analysts’ estimates of its future dividends.
Have profits and dividends increased?
Companies that don’t increase their profits can still be valuable, but it’s even more important to assess the sustainability of the dividend if it looks like the business will be struggling to grow. If profits fall and the company is forced to cut its dividend, investors could see the value of their investment go up in smoke. With that in mind, we are not excited to see that Vistry Group’s earnings per share have effectively remained stable over the past five years. We would take that on falling earnings any day, but in the long run, the best dividend-paying stocks increase all their earnings per share. Recent growth has not been impressive. However, companies that see their growth slowing can often choose to pay a higher percentage of their profits to shareholders, which could see the dividend continue to rise.
Most investors primarily assess a company’s dividend prospects by checking the historical rate of dividend growth. Since our data began 10 years ago, Vistry Group has increased its dividend by around 30% per year on average.
From a dividend perspective, should investors buy or avoid Vistry Group? Earnings per share have remained stable over this period, but we’re intrigued to see that Vistry Group pays less than half of its earnings and cash flow as dividends. This is interesting for several reasons, as it suggests that management may be reinvesting heavily in the company, but it also helps to increase the dividend over time. In general, we like to see both low payout ratios and strong earnings per share growth, but Vistry Group is halfway there. Vistry Group looks strong on this analysis overall, and we would definitely consider taking a closer look.
In light of this, while Vistry Group has an attractive dividend, it is worth knowing the risks associated with this stock. To help you, we have discovered 1 warning sign for Vistry Group which you should know before investing in their stocks.
A common investment mistake is to buy the first interesting stock you see. Here you will find a list of promising dividend paying stocks with a yield above 2% and an upcoming dividend.
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative material. Simply Wall St has no position in any of the stocks mentioned.
Do you have any feedback on this item? Are you worried about the content? Get in touch with us directly. You can also send an email to the editorial team (at) simplywallst.com.
If you decide to trade Vistry Group, use the cheapest platform * which is ranked # 1 overall by Barron’s, Interactive brokers. Trade stocks, options, futures, currencies, bonds and funds in 135 markets, all from one integrated account.Promoted