We Wouldn't Be Too Quick To Buy Hansard Global Plc (LON:HSD) Before It Goes Ex-Dividend

By
Simply Wall St
Published
March 06, 2021
LSE:HSD
Source: Shutterstock

Hansard Global Plc (LON:HSD) stock is about to trade ex-dividend in three days. You can purchase shares before the 11th of March in order to receive the dividend, which the company will pay on the 20th of April.

Hansard Global's next dividend payment will be UK£0.018 per share, and in the last 12 months, the company paid a total of UK£0.044 per share. Last year's total dividend payments show that Hansard Global has a trailing yield of 9.4% on the current share price of £0.472. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. We need to see whether the dividend is covered by earnings and if it's growing.

See our latest analysis for Hansard Global

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. Hansard Global distributed an unsustainably high 132% of its profit as dividends to shareholders last year. Without extenuating circumstances, we'd consider the dividend at risk of a cut.

Generally, the higher a company's payout ratio, the more the dividend is at risk of being reduced.

Click here to see how much of its profit Hansard Global paid out over the last 12 months.

historic-dividend
LSE:HSD Historic Dividend March 7th 2021

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Hansard Global's earnings per share have fallen at approximately 21% a year over the previous five years. Such a sharp decline casts doubt on the future sustainability of the dividend.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Hansard Global's dividend payments per share have declined at 10% per year on average over the past 10 years, which is uninspiring. While it's not great that earnings and dividends per share have fallen in recent years, we're encouraged by the fact that management has trimmed the dividend rather than risk over-committing the company in a risky attempt to maintain yields to shareholders.

To Sum It Up

Has Hansard Global got what it takes to maintain its dividend payments? Earnings per share are in decline and Hansard Global is paying out what we feel is an uncomfortably high percentage of its profit as dividends. It's not that we hate the business, but we feel that these characeristics are not desirable for investors seeking a reliable dividend stock to own for the long term. These characteristics don't generally lead to outstanding dividend performance, and investors may not be happy with the results of owning this stock for its dividend.

So if you're still interested in Hansard Global despite it's poor dividend qualities, you should be well informed on some of the risks facing this stock. Our analysis shows 3 warning signs for Hansard Global and you should be aware of these before buying any shares.

We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.

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