Dominion Lending Centres Inc. (TSE:DLCG) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Dominion Lending Centres Inc. (TSE:DLCG) 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. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. This means that investors who purchase Dominion Lending Centres' shares on or after the 30th of August will not receive the dividend, which will be paid on the 16th of September.

The company's next dividend payment will be CA$0.03 per share, on the back of last year when the company paid a total of CA$0.12 to shareholders. Based on the last year's worth of payments, Dominion Lending Centres has a trailing yield of 3.1% on the current stock price of CA$3.93. If you buy this business for its dividend, you should have an idea of whether Dominion Lending Centres's dividend is reliable and sustainable. So we need to investigate whether Dominion Lending Centres can afford its dividend, and if the dividend could grow.

View our latest analysis for Dominion Lending Centres

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. Dominion Lending Centres paid out more than half (58%) of its earnings last year, which is a regular payout ratio for most companies.

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?

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 decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. For this reason, we're glad to see Dominion Lending Centres's earnings per share have risen 19% per annum 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. Dominion Lending Centres has delivered an average of 12% per year annual increase in its dividend, based on the past eight years of dividend payments. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

To Sum It Up

From a dividend perspective, should investors buy or avoid Dominion Lending Centres? Earnings per share are growing nicely, and Dominion Lending Centres is paying out a percentage of its earnings that is around the average for dividend-paying stocks. Overall, Dominion Lending Centres looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

While it's tempting to invest in Dominion Lending Centres for the dividends alone, you should always be mindful of the risks involved. Every company has risks, and we've spotted 4 warning signs for Dominion Lending Centres (of which 1 can't be ignored!) you should know about.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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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.