Mortgage Advice Bureau (Holdings) plc (LON:MAB1) stock is about to trade ex-dividend in 2 days time. You will need to purchase shares before the 30th of April to receive the dividend, which will be paid on the 29th of May.
Mortgage Advice Bureau (Holdings)’s next dividend payment will be UK£0.064 per share, and in the last 12 months, the company paid a total of UK£0.17 per share. Looking at the last 12 months of distributions, Mortgage Advice Bureau (Holdings) has a trailing yield of approximately 3.4% on its current stock price of £5.15. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to check whether the dividend payments are covered, and if earnings are growing.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable – hardly an ideal situation. Mortgage Advice Bureau (Holdings) paid out more than half (62%) of its earnings last year, which is a regular payout ratio for most companies.
When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That’s why it’s comforting to see Mortgage Advice Bureau (Holdings)’s earnings have been skyrocketing, up 24% per annum 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, five years ago, Mortgage Advice Bureau (Holdings) has lifted its dividend by approximately 54% a year on average. It’s exciting to see that both earnings and dividends per share have grown rapidly over the past few years.
The Bottom Line
Is Mortgage Advice Bureau (Holdings) worth buying for its dividend? Earnings per share are growing nicely, and Mortgage Advice Bureau (Holdings) is paying out a percentage of its earnings that is around the average for dividend-paying stocks. Overall, Mortgage Advice Bureau (Holdings) looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
So while Mortgage Advice Bureau (Holdings) looks good from a dividend perspective, it’s always worthwhile being up to date with the risks involved in this stock. For example – Mortgage Advice Bureau (Holdings) has 2 warning signs we think you should be aware of.
We wouldn’t recommend just buying the first dividend stock you see, though. Here’s a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned.
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