Read This Before Considering Plus500 Ltd. (LON:PLUS) For Its Upcoming US$1.2001 Dividend
Plus500 Ltd. (LON:PLUS) stock is about to trade ex-dividend in 3 days. Typically, the ex-dividend date is two business days 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 of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. Therefore, if you purchase Plus500's shares on or after the 20th of August, you won't be eligible to receive the dividend, when it is paid on the 11th of November.
The company's next dividend payment will be US$1.2001 per share, on the back of last year when the company paid a total of US$2.45 to shareholders. Based on the last year's worth of payments, Plus500 has a trailing yield of 4.8% on the current stock price of UK£37.90. If you buy this business for its dividend, you should have an idea of whether Plus500's dividend is reliable and sustainable. As a result, readers should always check whether Plus500 has been able to grow its dividends, or if the dividend might be cut.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Plus500 has a low and conservative payout ratio of just 23% of its income after tax.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
Check out our latest analysis for Plus500
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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. So we're not too excited that Plus500's earnings are down 2.8% a year over the past five years.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the past 10 years, Plus500 has increased its dividend at approximately 12% a year on average.
Final Takeaway
Is Plus500 worth buying for its dividend? Earnings per share have shrunk noticeably in recent years, although we like that the company has a low payout ratio. This could suggest a cut to the dividend may not be a major risk in the near future. It doesn't appear an outstanding opportunity, but could be worth a closer look.
If you want to look further into Plus500, it's worth knowing the risks this business faces. Every company has risks, and we've spotted 1 warning sign for Plus500 you should know about.
Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.