Grosvenor Capital Management, L.P. (NASDAQ:GCMG) Will Pay A US$0.11 Dividend In Four Days

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Grosvenor Capital Management, L.P. (NASDAQ:GCMG) is about to go ex-dividend in just four days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Meaning, you will need to purchase Grosvenor Capital Management's shares before the 29th of February to receive the dividend, which will be paid on the 15th of March.

The company's upcoming dividend is US$0.11 a share, following on from the last 12 months, when the company distributed a total of US$0.44 per share to shareholders. Last year's total dividend payments show that Grosvenor Capital Management has a trailing yield of 5.2% on the current share price of US$8.44. If you buy this business for its dividend, you should have an idea of whether Grosvenor Capital Management's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

Check out our latest analysis for Grosvenor Capital Management

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Grosvenor Capital Management distributed an unsustainably high 149% of its profit as dividends to shareholders last year. Without more sustainable payment behaviour, the dividend looks precarious.

When the dividend payout ratio is high, as it is in this case, the dividend is usually at greater risk of being cut in the future.

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

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. It's encouraging to see Grosvenor Capital Management has grown its earnings rapidly, up 43% a year for the past five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Grosvenor Capital Management has delivered an average of 22% per year annual increase in its dividend, based on the past three years of dividend payments. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

Final Takeaway

Should investors buy Grosvenor Capital Management for the upcoming dividend? We're not enthused to see Grosvenor Capital Management's dividend was not well covered by earnings over the last year, although it is great to see earnings growing. We think there are likely better opportunities out there.

So if you want to do more digging on Grosvenor Capital Management, you'll find it worthwhile knowing the risks that this stock faces. To that end, you should learn about the 4 warning signs we've spotted with Grosvenor Capital Management (including 1 which is concerning).

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.