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Pollen Street Group Limited (LON:POLN) stock is about to trade ex-dividend in 3 days. The ex-dividend date is two business days before a company's record date in most cases, which is the date on which the company determines which shareholders are entitled 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. This means that investors who purchase Pollen Street Group's shares on or after the 3rd of April will not receive the dividend, which will be paid on the 2nd of May.
The company's upcoming dividend is UK£0.271 a share, following on from the last 12 months, when the company distributed a total of UK£0.54 per share to shareholders. Based on the last year's worth of payments, Pollen Street Group has a trailing yield of 7.2% on the current stock price of UK£7.56. If you buy this business for its dividend, you should have an idea of whether Pollen Street Group's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Pollen Street Group paid out 68% of its earnings to investors last year, a normal payout level for most businesses.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
See our latest analysis for Pollen Street Group
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's not encouraging to see that Pollen Street Group's earnings are effectively flat 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. Pollen Street Group has delivered an average of 23% per year annual increase in its dividend, based on the past nine years of dividend payments.
To Sum It Up
Has Pollen Street Group got what it takes to maintain its dividend payments? Pollen Street Group's earnings are effectively flat over recent years, even as the company pays out more than half of its earnings to shareholders as dividends. At best we would put it on a watch-list to see if business conditions improve, as it doesn't look like a clear opportunity right now.