Washington H. Soul Pattinson and Company Limited (ASX:SOL) Looks Interesting, And It's About To Pay A Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Washington H. Soul Pattinson and Company Limited (ASX:SOL) is about to trade ex-dividend in the next 4 days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Meaning, you will need to purchase Washington H. Soul Pattinson's shares before the 17th of November to receive the dividend, which will be paid on the 12th of December.

The company's upcoming dividend is AU$0.51 a share, following on from the last 12 months, when the company distributed a total of AU$0.87 per share to shareholders. Based on the last year's worth of payments, Washington H. Soul Pattinson has a trailing yield of 2.5% on the current stock price of A$34.35. If you buy this business for its dividend, you should have an idea of whether Washington H. Soul Pattinson's dividend is reliable and sustainable. As a result, readers should always check whether Washington H. Soul Pattinson has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Washington H. Soul Pattinson

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. That's why it's good to see Washington H. Soul Pattinson paying out a modest 40% of its earnings.

Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.

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

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings fall far enough, the company could be forced to cut its dividend. With that in mind, we're encouraged by the steady growth at Washington H. Soul Pattinson, with earnings per share up 8.8% on average over the last five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the past 10 years, Washington H. Soul Pattinson has increased its dividend at approximately 6.6% a year on average. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

To Sum It Up

Should investors buy Washington H. Soul Pattinson for the upcoming dividend? It has been growing its earnings per share somewhat in recent years, although it reinvests more than half its earnings in the business, which could suggest there are some growth projects that have not yet reached fruition. In summary, Washington H. Soul Pattinson appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

Wondering what the future holds for Washington H. Soul Pattinson? See what the two analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.