Numis Corporation Plc (LON:NUM) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

Numis Corporation Plc (LON:NUM) is about to trade ex-dividend in the next four days. You will need to purchase shares before the 17th of December to receive the dividend, which will be paid on the 12th of February.

Numis's next dividend payment will be UK£0.065 per share, on the back of last year when the company paid a total of UK£0.12 to shareholders. Based on the last year's worth of payments, Numis has a trailing yield of 3.5% on the current stock price of £3.39. If you buy this business for its dividend, you should have an idea of whether Numis's dividend is reliable and sustainable. As a result, readers should always check whether Numis has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Numis

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. Fortunately Numis's payout ratio is modest, at just 40% of profit.

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 how much of its profit Numis paid out over the last 12 months.

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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. This is why it's a relief to see Numis earnings per share are up 8.9% per annum over the last 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, Numis has lifted its dividend by approximately 4.1% a year on average. 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.

To Sum It Up

Should investors buy Numis for the upcoming dividend? Numis has seen its earnings per share grow slowly in recent years, and the company reinvests more than half of its profits in the business, which generally bodes well for its future prospects. Numis ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.

While it's tempting to invest in Numis for the dividends alone, you should always be mindful of the risks involved. Our analysis shows 1 warning sign for Numis and you should be aware of this before buying any shares.

If you're in the market for dividend stocks, we recommend checking our list of top 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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