In This Article:
It looks like Sprott Inc. (TSE:SII) is about to go ex-dividend in the next three days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. 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 Sprott's shares on or after the 19th of August will not receive the dividend, which will be paid on the 3rd of September.
The company's upcoming dividend is US$0.25 a share, following on from the last 12 months, when the company distributed a total of US$1.00 per share to shareholders. Last year's total dividend payments show that Sprott has a trailing yield of 2.5% on the current share price of CA$55.64. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. We need to see whether the dividend is covered by earnings and if it's growing.
See our latest analysis for Sprott
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Sprott is paying out an acceptable 61% of its profit, a common payout level among most companies.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Fortunately for readers, Sprott's earnings per share have been growing at 11% a year for the past five years.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Sprott has seen its dividend decline 0.6% per annum on average over the past 10 years, which is not great to see.
To Sum It Up
Should investors buy Sprott for the upcoming dividend? Earnings per share are growing nicely, and Sprott is paying out a percentage of its earnings that is around the average for dividend-paying stocks. In summary, Sprott appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.