Why It Might Not Make Sense To Buy Greencoat Renewables PLC (ISE:GRP) For Its Upcoming Dividend

Greencoat Renewables PLC (ISE:GRP) stock is about to trade ex-dividend in three days. The ex-dividend date generally occurs two days before the record date, which is the day on which shareholders need to be on the company's books in order 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. Thus, you can purchase Greencoat Renewables' shares before the 20th of November in order to receive the dividend, which the company will pay on the 12th of December.

The company's next dividend payment will be €0.017025 per share, and in the last 12 months, the company paid a total of €0.068 per share. Based on the last year's worth of payments, Greencoat Renewables stock has a trailing yield of around 9.8% on the current share price of €0.695. If you buy this business for its dividend, you should have an idea of whether Greencoat Renewables's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.

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Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Greencoat Renewables reported a loss after tax last year, which means it's paying a dividend despite being unprofitable. While this might be a one-off event, this is unlikely to be sustainable in the long term.

View our latest analysis for Greencoat Renewables

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

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If earnings fall far enough, the company could be forced to cut its dividend. Greencoat Renewables reported a loss last year, and the general trend suggests its earnings have also been declining in recent years, making us wonder if the dividend is at risk.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Greencoat Renewables has delivered 1.6% dividend growth per year on average over the past eight years.

We update our analysis on Greencoat Renewables every 24 hours, so you can always get the latest insights on its financial health, here.

Final Takeaway

Is Greencoat Renewables worth buying for its dividend? It's definitely not great to see that it paid a dividend despite reporting a loss last year. Worse, the general trend in its earnings looks negative in recent times. All things considered, we're not optimistic about its dividend prospects, and would be inclined to leave it on the shelf for now.

Although, if you're still interested in Greencoat Renewables and want to know more, you'll find it very useful to know what risks this stock faces. To help with this, we've discovered 3 warning signs for Greencoat Renewables that you should be aware of before investing in their shares.

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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.