Vistry Group PLC (LON:VTY) Goes Ex-Dividend Soon

Vistry Group PLC (LON:VTY) stock is about to trade ex-dividend in 3 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. 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. In other words, investors can purchase Vistry Group's shares before the 7th of April in order to be eligible for the dividend, which will be paid on the 24th of May.

The company's next dividend payment will be UK£0.40 per share, on the back of last year when the company paid a total of UK£0.80 to shareholders. Looking at the last 12 months of distributions, Vistry Group has a trailing yield of approximately 8.5% on its current stock price of £9.44. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether Vistry Group can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Vistry Group

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Vistry Group is paying out an acceptable 52% of its profit, a common payout level among most companies. A useful secondary check can be to evaluate whether Vistry Group generated enough free cash flow to afford its dividend. Fortunately, it paid out only 34% of its free cash flow in the past year.

It's positive to see that Vistry Group's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. With that in mind, we're encouraged by the steady growth at Vistry Group, with earnings per share up 6.4% on average over the last five years. While earnings have been growing at a credible rate, the company is paying out a majority of its earnings to shareholders. Therefore it's unlikely that the company will be able to reinvest heavily in its business, which could presage slower growth in the future.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Vistry Group has delivered an average of 40% per year annual increase in its dividend, based on the past 10 years of dividend payments. 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.

Final Takeaway

Is Vistry Group an attractive dividend stock, or better left on the shelf? While earnings per share growth has been modest, Vistry Group's dividend payouts are around an average level; without a sharp change in earnings we feel that the dividend is likely somewhat sustainable. Pleasingly the company paid out a conservatively low percentage of its free cash flow. In summary, it's hard to get excited about Vistry Group from a dividend perspective.

On that note, you'll want to research what risks Vistry Group is facing. Our analysis shows 2 warning signs for Vistry Group and you should be aware of these before buying any shares.

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.