Is It Smart To Buy Mattioli Woods plc (LON:MTW) Before It Goes Ex-Dividend?

It looks like Mattioli Woods plc (LON:MTW) is about to go ex-dividend in the next four days. If you purchase the stock on or after the 18th of February, you won't be eligible to receive this dividend, when it is paid on the 26th of March.

Mattioli Woods's next dividend payment will be UK£0.075 per share, and in the last 12 months, the company paid a total of UK£0.20 per share. Looking at the last 12 months of distributions, Mattioli Woods has a trailing yield of approximately 2.7% on its current stock price of £7.5. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to investigate whether Mattioli Woods can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Mattioli Woods

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. Mattioli Woods paid out 54% of its earnings to investors last year, a normal payout level for most businesses.

Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.

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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. For this reason, we're glad to see Mattioli Woods's earnings per share have risen 14% per annum over the last five years.

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, Mattioli Woods has lifted its dividend by approximately 16% a year on average. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

Final Takeaway

Should investors buy Mattioli Woods for the upcoming dividend? Earnings per share are growing nicely, and Mattioli Woods is paying out a percentage of its earnings that is around the average for dividend-paying stocks. In summary, Mattioli Woods appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

On that note, you'll want to research what risks Mattioli Woods is facing. For example, we've found 1 warning sign for Mattioli Woods that we recommend you consider before investing in the business.

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.

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This article by Simply Wall St is general in nature. 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.
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