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goeasy Ltd. (TSE:GSY) stock is about to trade ex-dividend in four days. If you purchase the stock on or after the 23rd of December, you won't be eligible to receive this dividend, when it is paid on the 8th of January.
goeasy's next dividend payment will be CA$0.45 per share, on the back of last year when the company paid a total of CA$1.80 to shareholders. Calculating the last year's worth of payments shows that goeasy has a trailing yield of 1.8% on the current share price of CA$99.35. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
Check out our latest analysis for goeasy
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. goeasy paid out a comfortable 26% of its profit last year.
When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. It's encouraging to see goeasy has grown its earnings rapidly, up 34% 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. goeasy has delivered 18% dividend growth per year on average over the past 10 years. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.
The Bottom Line
Is goeasy worth buying for its dividend? When companies are growing rapidly and retaining a majority of the profits within the business, it's usually a sign that reinvesting earnings creates more value than paying dividends to shareholders. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. goeasy ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.