Brickability Group Plc (LON:BRCK) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

Brickability Group Plc (LON:BRCK) is about to trade ex-dividend in the next 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. Accordingly, Brickability Group investors that purchase the stock on or after the 24th of August will not receive the dividend, which will be paid on the 21st of September.

The company's next dividend payment will be UK£0.021 per share, and in the last 12 months, the company paid a total of UK£0.032 per share. Based on the last year's worth of payments, Brickability Group stock has a trailing yield of around 5.9% on the current share price of £0.537. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Brickability Group has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Brickability Group

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Brickability Group paid out a comfortable 34% of its profit last year. 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. Fortunately, it paid out only 35% of its free cash flow in the past 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.

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. That's why it's comforting to see Brickability Group's earnings have been skyrocketing, up 145% per annum for the past five years. Brickability Group is paying out less than half its earnings and cash flow, while simultaneously growing earnings per share at a rapid clip. Companies with growing earnings and low payout ratios are often the best long-term dividend stocks, as the company can both grow its earnings and increase the percentage of earnings that it pays out, essentially multiplying the dividend.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last four years, Brickability Group has lifted its dividend by approximately 16% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

To Sum It Up

Should investors buy Brickability Group for the upcoming dividend? Brickability Group has been growing earnings at a rapid rate, and has a conservatively low payout ratio, implying that it is reinvesting heavily in its business; a sterling combination. Brickability Group looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

While it's tempting to invest in Brickability Group for the dividends alone, you should always be mindful of the risks involved. To help with this, we've discovered 1 warning sign for Brickability Group that you should be aware of before investing in their 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.