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M&G Credit Income Investment Trust plc (LON:MGCI) stock is about to trade ex-dividend in three days. The ex-dividend date occurs one day 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 M&G Credit Income Investment Trust's shares before the 2nd of February in order to receive the dividend, which the company will pay on the 24th of February.
The company's next dividend payment will be UK£0.024 per share, and in the last 12 months, the company paid a total of UK£0.04 per share. Looking at the last 12 months of distributions, M&G Credit Income Investment Trust has a trailing yield of approximately 4.2% on its current stock price of £0.969. 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 investigate whether M&G Credit Income Investment Trust can afford its dividend, and if the dividend could grow.
See our latest analysis for M&G Credit Income Investment Trust
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. M&G Credit Income Investment Trust paid a dividend last year despite being unprofitable. This might be a one-off event, but it's not a sustainable state of affairs in the long run.
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. M&G Credit Income Investment Trust was unprofitable last year and, unfortunately, the general trend suggests its earnings have been in decline over the last three years, making us wonder if the dividend is sustainable at all.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. M&G Credit Income Investment Trust has delivered 25% dividend growth per year on average over the past three years.
Get our latest analysis on M&G Credit Income Investment Trust's balance sheet health here.
Final Takeaway
From a dividend perspective, should investors buy or avoid M&G Credit Income Investment Trust? First, it's not great to see the company paying a dividend despite being loss-making over the last year. Worse, the general trend in its earnings looks negative in recent years. These characteristics don't generally lead to outstanding dividend performance, and investors may not be happy with the results of owning this stock for its dividend.