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Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Macquarie Group Limited (ASX:MQG) is about to trade ex-dividend in the next 4 days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible 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. In other words, investors can purchase Macquarie Group's shares before the 7th of November in order to be eligible for the dividend, which will be paid on the 13th of December.
The company's next dividend payment will be AU$3.00 per share. Last year, in total, the company distributed AU$6.22 to shareholders. Calculating the last year's worth of payments shows that Macquarie Group has a trailing yield of 3.6% on the current share price of A$172. 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! So we need to investigate whether Macquarie Group can afford its dividend, and if the dividend could grow.
See our latest analysis for Macquarie Group
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Fortunately Macquarie Group's payout ratio is modest, at just 50% of profit.
Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.
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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Fortunately for readers, Macquarie Group's earnings per share have been growing at 15% 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. In the last 10 years, Macquarie Group has lifted its dividend by approximately 15% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.