It looks like RBG Holdings plc (LON:RBGP) is about to go ex-dividend in the next 4 days. If you purchase the stock on or after the 3rd of October, you won't be eligible to receive this dividend, when it is paid on the 1st of January.
RBG Holdings's upcoming dividend is UK£0.02 a share, following on from the last 12 months, when the company distributed a total of UK£0.04 per share to shareholders. Based on the last year's worth of payments, RBG Holdings has a trailing yield of 3.9% on the current stock price of £1.035. If you buy this business for its dividend, you should have an idea of whether RBG Holdings's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.
See our latest analysis for RBG Holdings
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. RBG Holdings paid out 73% of its earnings to investors last year, a normal payout level for most businesses.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Companies with falling earnings are riskier for dividend shareholders. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. From this perspective it's somewhat discouraging that earnings per share are down 4.3% but we'd note that investment in future growth can cause a similar impact.
RBG Holdings also issued more than 5% of its market cap in new stock during the past year, which we feel is likely to hurt its dividend prospects in the long run. It's hard to grow dividends per share when a company keeps creating new shares.
This is RBG Holdings's first year of paying a dividend, so it doesn't have much of a history yet to compare to.
To Sum It Up
Is RBG Holdings an attractive dividend stock, or better left on the shelf? Earnings per share have been declining and the company is paying out more than half its profits to shareholders; not an enticing combination. It might be worth researching if the company is reinvesting in growth projects that could grow earnings and dividends in the future, but for now we're on the fence about its dividend prospects.
Curious what other investors think of RBG Holdings? See what analysts are forecasting, with this visualisation of its historical and future estimated earnings and cash flow.
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.
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