Sprott Inc. (TSE:SII) Passed Our Checks, And It's About To Pay A US$0.30 Dividend

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Sprott Inc. (TSE:SII) is about to go ex-dividend in just 2 days. The ex-dividend date is commonly two business days before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is important as the process of settlement involves at least two full business days. So if you miss that date, you would not show up on the company's books on the record date. This means that investors who purchase Sprott's shares on or after the 10th of March will not receive the dividend, which will be paid on the 25th of March.

The company's upcoming dividend is US$0.30 a share, following on from the last 12 months, when the company distributed a total of US$1.20 per share to shareholders. Based on the last year's worth of payments, Sprott has a trailing yield of 2.8% on the current stock price of CA$61.53. If you buy this business for its dividend, you should have an idea of whether Sprott's dividend is reliable and sustainable. As a result, readers should always check whether Sprott has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for Sprott

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. Sprott is paying out an acceptable 57% of its profit, a common payout level among 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?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That's why it's comforting to see Sprott's earnings have been skyrocketing, up 36% per annum for the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last 10 years, Sprott has lifted its dividend by approximately 1.1% a year on average. It's good to see both earnings and the dividend have improved - although the former has been rising much quicker than the latter, possibly due to the company reinvesting more of its profits in growth.

Final Takeaway

Has Sprott got what it takes to maintain its dividend payments? Sprott has an acceptable payout ratio and its earnings per share have been improving at a decent rate. Overall, Sprott 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 Sprott for the dividends alone, you should always be mindful of the risks involved. In terms of investment risks, we've identified 2 warning signs with Sprott and understanding them should be part of your investment process.

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.