Why You Might Be Interested In Grand Harbour Marina p.l.c (MTSE:GHM) For Its Upcoming Dividend

Readers hoping to buy Grand Harbour Marina p.l.c (MTSE:GHM) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. 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 important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Thus, you can purchase Grand Harbour Marina p.l.c's shares before the 22nd of May in order to receive the dividend, which the company will pay on the 30th of May.

The company's upcoming dividend is €0.019 a share, following on from the last 12 months, when the company distributed a total of €0.019 per share to shareholders. Based on the last year's worth of payments, Grand Harbour Marina p.l.c stock has a trailing yield of around 3.5% on the current share price of €0.55. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to check whether the dividend payments are covered, and if earnings are growing.

See our latest analysis for Grand Harbour Marina p.l.c

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. Fortunately Grand Harbour Marina p.l.c's payout ratio is modest, at just 25% of profit. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. It paid out an unsustainably high 579% of its free cash flow as dividends over the past 12 months, which is worrying. Our definition of free cash flow excludes cash generated from asset sales, so since Grand Harbour Marina p.l.c is paying out such a high percentage of its cash flow, it might be worth seeing if it sold assets or had similar events that might have led to such a high dividend payment.

While Grand Harbour Marina p.l.c's dividends were covered by the company's reported profits, cash is somewhat more important, so it's not great to see that the company didn't generate enough cash to pay its dividend. Were this to happen repeatedly, this would be a risk to Grand Harbour Marina p.l.c's ability to maintain its dividend.

Click here to see how much of its profit Grand Harbour Marina p.l.c paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. That's why it's comforting to see Grand Harbour Marina p.l.c's earnings have been skyrocketing, up 98% per annum for the past five years. Earnings have been growing quickly, but we're concerned dividend payments consumed most of the company's cash flow over the past year.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Grand Harbour Marina p.l.c has seen its dividend decline 12% per annum on average over the past 10 years, which is not great to see. Grand Harbour Marina p.l.c is a rare case where dividends have been decreasing at the same time as earnings per share have been improving. It's unusual to see, and could point to unstable conditions in the core business, or more rarely an intensified focus on reinvesting profits.

To Sum It Up

Has Grand Harbour Marina p.l.c got what it takes to maintain its dividend payments? We like that Grand Harbour Marina p.l.c has been successfully growing its earnings per share at a nice rate and reinvesting most of its profits in the business. However, we note the high cashflow payout ratio with some concern. Overall, it's hard to get excited about Grand Harbour Marina p.l.c from a dividend perspective.

So while Grand Harbour Marina p.l.c looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. To help with this, we've discovered 6 warning signs for Grand Harbour Marina p.l.c (3 are potentially serious!) that you ought to be aware of before buying the 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.