Here's What We Like About S&U's (LON:SUS) Upcoming Dividend

It looks like S&U plc (LON:SUS) is about to go ex-dividend in the next 2 days. This means that investors who purchase shares on or after the 18th of February will not receive the dividend, which will be paid on the 12th of March.

S&U's next dividend payment will be UK£0.25 per share, on the back of last year when the company paid a total of UK£1.20 to shareholders. Based on the last year's worth of payments, S&U stock has a trailing yield of around 4.3% on the current share price of £22.8. 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! That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

See our latest analysis for S&U

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. S&U paid out 66% of its earnings to investors last year, a normal payout level for most businesses.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. For this reason, we're glad to see S&U's earnings per share have risen 10% 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. S&U has delivered 11% dividend growth per year on average over the past 10 years. 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

Is S&U an attractive dividend stock, or better left on the shelf? Earnings per share are growing at an attractive rate, and S&U is paying out a bit over half its profits. We think this is a pretty attractive combination, and would be interested in investigating S&U more closely.

So while S&U looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. For example - S&U has 5 warning signs we think you should be aware of.

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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