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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 Develop North PLC (LON:DVNO) is about to trade ex-dividend in the next 3 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. Thus, you can purchase Develop North's shares before the 5th of December in order to receive the dividend, which the company will pay on the 27th of December.
The company's next dividend payment will be UK£0.01 per share, on the back of last year when the company paid a total of UK£0.04 to shareholders. Last year's total dividend payments show that Develop North has a trailing yield of 5.1% on the current share price of UK£0.78. 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 Develop North can afford its dividend, and if the dividend could grow.
See our latest analysis for Develop North
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. Develop North paid out more than half (61%) of its earnings last year, which is a regular payout ratio for most companies.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
Click here to see how much of its profit Develop North paid out over the last 12 months.
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 earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. With that in mind, we're not enthused to see that Develop North's earnings per share have remained 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. Develop North has seen its dividend decline 4.9% per annum on average over the past eight years, which is not great to see.