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It looks like VH Global Energy Infrastructure PLC (LON:ENRG) is about to go ex-dividend in the next 4 days. The ex-dividend date is usually set to be two business days before the record date, which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. 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. This means that investors who purchase VH Global Energy Infrastructure's shares on or after the 6th of March will not receive the dividend, which will be paid on the 27th of March.
The company's next dividend payment will be UK£0.0145 per share. Last year, in total, the company distributed UK£0.057 to shareholders. Last year's total dividend payments show that VH Global Energy Infrastructure has a trailing yield of 9.6% on the current share price of UK£0.594. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! We need to see whether the dividend is covered by earnings and if it's growing.
View our latest analysis for VH Global Energy Infrastructure
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. VH Global Energy Infrastructure distributed an unsustainably high 122% of its profit as dividends to shareholders last year. Without extenuating circumstances, we'd consider the dividend at risk of a cut.
Generally, the higher a company's payout ratio, the more the dividend is at risk of being reduced.
Click here to see how much of its profit VH Global Energy Infrastructure paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Businesses with shrinking earnings are tricky from a dividend perspective. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. As a result, it's definitely disappointing to see that earnings per share have declined 12% over the past year.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, three years ago, VH Global Energy Infrastructure has lifted its dividend by approximately 31% a year on average. That's intriguing, but the combination of growing dividends despite declining earnings can typically only be achieved by paying out a larger percentage of profits. VH Global Energy Infrastructure is already paying out a high percentage of its income, so without earnings growth, we're doubtful of whether this dividend will grow much in the future.