Interested In A.G. BARR's (LON:BAG) Upcoming UK£0.10 Dividend? You Have Three Days Left

By
Simply Wall St
Published
May 08, 2022
LSE:BAG
Source: Shutterstock

A.G. BARR p.l.c. (LON:BAG) stock is about to trade ex-dividend in 3 days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. 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. In other words, investors can purchase A.G. BARR's shares before the 12th of May in order to be eligible for the dividend, which will be paid on the 10th of June.

The company's next dividend payment will be UK£0.10 per share, and in the last 12 months, the company paid a total of UK£0.12 per share. Based on the last year's worth of payments, A.G. BARR stock has a trailing yield of around 2.2% on the current share price of £5.55. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether A.G. BARR has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for A.G. BARR

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 A.G. BARR paying out a modest 48% of its earnings. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. What's good is that dividends were well covered by free cash flow, with the company paying out 5.7% of its cash flow last year.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

historic-dividend
LSE:BAG Historic Dividend May 8th 2022

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That's why it's not ideal to see A.G. BARR's earnings per share have been shrinking at 4.0% a year over the previous five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. A.G. BARR has delivered an average of 2.6% per year annual increase in its dividend, based on the past 10 years of dividend payments.

To Sum It Up

Is A.G. BARR an attractive dividend stock, or better left on the shelf? Earnings per share are down meaningfully, although at least the company is paying out a low and conservative percentage of both its earnings and cash flow. It's definitely not great to see earnings falling, but at least there may be some buffer before the dividend needs to be cut. Overall, it's hard to get excited about A.G. BARR from a dividend perspective.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. For example, we've found 1 warning sign for A.G. BARR that we recommend you consider before investing in the business.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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