It Might Not Be A Great Idea To Buy Young & Co.'s Brewery, P.L.C. (LON:YNGA) For Its Next Dividend

By
Simply Wall St
Published
November 15, 2021
AIM:YNGA
Source: Shutterstock

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 Young & Co.'s Brewery, P.L.C. (LON:YNGA) is about to go ex-dividend in just couple of 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 important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Therefore, if you purchase Young's Brewery's shares on or after the 18th of November, you won't be eligible to receive the dividend, when it is paid on the 3rd of December.

The company's next dividend payment will be UK£0.086 per share, on the back of last year when the company paid a total of UK£0.17 to shareholders. Based on the last year's worth of payments, Young's Brewery stock has a trailing yield of around 1.1% on the current share price of £14.9. If you buy this business for its dividend, you should have an idea of whether Young's Brewery's dividend is reliable and sustainable. As a result, readers should always check whether Young's Brewery has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Young's Brewery

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Young's Brewery paid a dividend last year despite being unprofitable. This might be a one-off event, but it's not a sustainable state of affairs in the long run.

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

historic-dividend
AIM:YNGA Historic Dividend November 16th 2021

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Young's Brewery reported a loss last year, and the general trend suggests its earnings have also been declining in recent years, making us wonder if the dividend is at risk.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last 10 years, Young's Brewery has lifted its dividend by approximately 2.6% a year on average.

We update our analysis on Young's Brewery every 24 hours, so you can always get the latest insights on its financial health, here.

To Sum It Up

Is Young's Brewery worth buying for its dividend? All things considered, we're not optimistic about its dividend prospects, and would be inclined to leave it on the shelf for now.

With that in mind though, if the poor dividend characteristics of Young's Brewery don't faze you, it's worth being mindful of the risks involved with this business. For example, we've found 1 warning sign for Young's Brewery that we recommend you consider before investing in the business.

We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.

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