We Wouldn't Be Too Quick To Buy Sabre Insurance Group Plc (LON:SBRE) Before It Goes Ex-Dividend

Sabre Insurance Group Plc (LON:SBRE) is about to trade ex-dividend in the next 3 days. This means that investors who purchase shares on or after the 23rd of April will not receive the dividend, which will be paid on the 28th of May.

Sabre Insurance Group's upcoming dividend is UK£0.081 a share, following on from the last 12 months, when the company distributed a total of UK£0.13 per share to shareholders. Based on the last year's worth of payments, Sabre Insurance Group stock has a trailing yield of around 4.6% on the current share price of £2.81. 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 Sabre Insurance Group

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. Sabre Insurance Group paid out 70% of its earnings to investors last year, a normal payout level for most businesses.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Readers will understand then, why we're concerned to see Sabre Insurance Group's earnings per share have dropped 22% a year over the past five years. When earnings per share fall, the maximum amount of dividends that can be paid also falls.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Sabre Insurance Group has seen its dividend decline 5.7% per annum on average over the past two years, which is not great to see. It's never nice to see earnings and dividends falling, but at least management has cut the dividend rather than potentially risk the company's health in an attempt to maintain it.

To Sum It Up

Should investors buy Sabre Insurance Group for the upcoming dividend? We're not overly enthused to see Sabre Insurance Group's earnings in retreat at the same time as the company is paying out more than half of its earnings as dividends to shareholders. Sabre Insurance Group doesn't appear to have a lot going for it, and we're not inclined to take a risk on owning it for the dividend.

With that in mind though, if the poor dividend characteristics of Sabre Insurance Group don't faze you, it's worth being mindful of the risks involved with this business. Our analysis shows 1 warning sign for Sabre Insurance Group and you should be aware of it before buying any shares.

If you're in the market for dividend stocks, we recommend checking our list of top 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 editorial-team@simplywallst.com. 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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.