Be Sure To Check Out McCoy Global Inc. (TSE:MCB) Before It Goes Ex-Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see McCoy Global Inc. (TSE:MCB) is about to trade ex-dividend in the next four days. The ex-dividend date is one business day 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 of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Thus, you can purchase McCoy Global's shares before the 28th of June in order to receive the dividend, which the company will pay on the 15th of July.

The company's next dividend payment will be CA$0.02 per share, and in the last 12 months, the company paid a total of CA$0.08 per share. Based on the last year's worth of payments, McCoy Global stock has a trailing yield of around 4.0% on the current share price of CA$1.98. If you buy this business for its dividend, you should have an idea of whether McCoy Global's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.

Check out our latest analysis for McCoy Global

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. McCoy Global is paying out just 20% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. A useful secondary check can be to evaluate whether McCoy Global generated enough free cash flow to afford its dividend.

Click here to see how much of its profit McCoy Global paid out over the last 12 months.

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 earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. It's encouraging to see McCoy Global has grown its earnings rapidly, up 59% a year 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. McCoy Global's dividend payments per share have declined at 8.8% per year on average over the past 10 years, which is uninspiring. McCoy Global is a rare case where dividends have been decreasing at the same time as earnings per share have been improving. It's unusual to see, and could point to unstable conditions in the core business, or more rarely an intensified focus on reinvesting profits.

Final Takeaway

From a dividend perspective, should investors buy or avoid McCoy Global? We like that McCoy Global has been successfully growing its earnings per share at a nice rate and reinvesting most of its profits in the business. However, we note the high cashflow payout ratio with some concern. Overall we're not hugely bearish on the stock, but there are likely better dividend investments out there.

So while McCoy Global looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. Be aware that McCoy Global is showing 4 warning signs in our investment analysis, and 1 of those shouldn't be ignored...

If you're in the market for strong dividend payers, we recommend checking our selection of top 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com