There's A Lot To Like About M&G Credit Income Investment Trust's (LON:MGCI) Upcoming UK£0.0076 Dividend

Readers hoping to buy M&G Credit Income Investment Trust plc (LON:MGCI) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. 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. 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 M&G Credit Income Investment Trust's shares before the 4th of November in order to be eligible for the dividend, which will be paid on the 26th of November.

The company's next dividend payment will be UK£0.0076 per share. Last year, in total, the company distributed UK£0.043 to shareholders. Calculating the last year's worth of payments shows that M&G Credit Income Investment Trust has a trailing yield of 4.4% on the current share price of £0.982. 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! We need to see whether the dividend is covered by earnings and if it's growing.

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. That's why it's good to see M&G Credit Income Investment Trust paying out a modest 47% of its earnings.

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 M&G Credit Income Investment Trust 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. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. For that reason, it's encouraging to see M&G Credit Income Investment Trust's earnings over the past year have risen 25%. While we'd be remiss not to point out that a year is a very short time in dividend investing, it's an encouraging sign so far.

We do note though, one year is too short a time to be drawing strong conclusions about a company's future growth prospects.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last two years, M&G Credit Income Investment Trust has lifted its dividend by approximately 43% 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.

To Sum It Up

Should investors buy M&G Credit Income Investment Trust for the upcoming dividend? When companies are growing rapidly and retaining a majority of the profits within the business, it's usually a sign that reinvesting earnings creates more value than paying dividends to shareholders. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. M&G Credit Income Investment Trust 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.

On that note, you'll want to research what risks M&G Credit Income Investment Trust is facing. Every company has risks, and we've spotted 1 warning sign for M&G Credit Income Investment Trust you should know about.

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.

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.

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