It Might Not Be A Great Idea To Buy U.S. Global Investors, Inc. (NASDAQ:GROW) For Its Next Dividend

U.S. Global Investors, Inc. (NASDAQ:GROW) is about to trade ex-dividend in the next 4 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 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. This means that investors who purchase U.S. Global Investors' shares on or after the 8th of November will not receive the dividend, which will be paid on the 25th of November.

The company's next dividend payment will be US$0.0075 per share, on the back of last year when the company paid a total of US$0.09 to shareholders. Calculating the last year's worth of payments shows that U.S. Global Investors has a trailing yield of 3.6% on the current share price of US$2.48. If you buy this business for its dividend, you should have an idea of whether U.S. Global Investors's dividend is reliable and sustainable. As a result, readers should always check whether U.S. Global Investors has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for U.S. Global Investors

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. U.S. Global Investors paid out 96% of its earnings, which is more than we're comfortable with, unless there are mitigating circumstances.

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 how much of its profit U.S. Global Investors paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That explains why we're not overly excited about U.S. Global Investors's flat earnings over the past five years. We'd take that over an earnings decline any day, but in the long run, the best dividend stocks all grow their earnings per share.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. U.S. Global Investors has delivered 4.1% dividend growth per year on average over the past 10 years.

Final Takeaway

Has U.S. Global Investors got what it takes to maintain its dividend payments? U.S. Global Investors's earnings have barely moved in recent times, and the company is paying out a disagreeably high percentage of its earnings; a mediocre combination. 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 U.S. Global Investors and want to know more, you'll find it very useful to know what risks this stock faces. Our analysis shows 3 warning signs for U.S. Global Investors that we strongly recommend you have a look at before investing in the company.

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.