M&G Credit Income Investment Trust plc (LON:MGCI) Will Pay A UK£0.021 Dividend In Four Days

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see M&G Credit Income Investment Trust plc (LON:MGCI) is about to trade ex-dividend in the next 4 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 of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Thus, you can purchase M&G Credit Income Investment Trust's shares before the 2nd of November in order to receive the dividend, which the company will pay on the 24th of November.

The company's upcoming dividend is UK£0.021 a share, following on from the last 12 months, when the company distributed a total of UK£0.053 per share to shareholders. Based on the last year's worth of payments, M&G Credit Income Investment Trust stock has a trailing yield of around 5.9% on the current share price of £0.908. 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 M&G Credit Income Investment Trust can afford its dividend, and if the dividend could grow.

Check out our latest analysis for M&G Credit Income Investment Trust

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. M&G Credit Income Investment Trust distributed an unsustainably high 147% of its profit as dividends to shareholders last year. Without more sustainable payment behaviour, the dividend looks precarious.

When the dividend payout ratio is high, as it is in this case, the dividend is usually at greater risk of being cut in the future.

Click here to see how much of its profit M&G Credit Income Investment Trust paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Fortunately for readers, M&G Credit Income Investment Trust's earnings per share have been growing at 11% 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. In the last four years, M&G Credit Income Investment Trust has lifted its dividend by approximately 26% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

Final Takeaway

Is M&G Credit Income Investment Trust worth buying for its dividend? It's been growing earnings per share at a pleasant rate, although its dividend payout was not well covered by earnings. It doesn't appear an outstanding opportunity, but could be worth a closer look.

With that being said, if dividends aren't your biggest concern with M&G Credit Income Investment Trust, you should know about the other risks facing this business. To help with this, we've discovered 2 warning signs for M&G Credit Income Investment Trust (1 can't be ignored!) that you ought to be aware of before buying the 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.