Just Three Days Till International Personal Finance plc (LON:IPF) Will Be Trading Ex-Dividend

Some investors rely on dividends for growing their wealth, and if you’re one of those dividend sleuths, you might be intrigued to know that International Personal Finance plc (LON:IPF) is about to go ex-dividend in just three days. The ex-dividend date is one business day before a company’s record date, 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. Accordingly, International Personal Finance investors that purchase the stock on or after the 31st of August will not receive the dividend, which will be paid on the 29th of September.

The company’s upcoming dividend is UK£0.031 a share, following on from the last 12 months, when the company distributed a total of UK£0.096 per share to shareholders. Last year’s total dividend payments show that International Personal Finance has a trailing yield of 8.0% on the current share price of £1.195. 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! We need to see whether the dividend is covered by earnings and if it’s growing.

Check out our latest analysis for International Personal Finance

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. International Personal Finance paid out a comfortable 48% of its profit last year.

Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.

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 earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That explains why we’re not overly excited about International Personal Finance’s flat earnings over the past five years. It’s better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share.

The main way most investors will assess a company’s dividend prospects is by checking the historical rate of dividend growth. International Personal Finance has delivered an average of 2.2% per year annual increase in its dividend, based on the past 10 years of dividend payments.

To Sum It Up

Is International Personal Finance worth buying for its dividend? International Personal Finance’s earnings per share are basically flat over the past five years, although it has the cushion of a low payout ratio, which would suggest a cut to the dividend is relatively unlikely. 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.

If you want to look further into International Personal Finance, it’s worth knowing the risks this business faces. Be aware that International Personal Finance is showing 2 warning signs in our investment analysis, and 1 of those is potentially serious…

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.

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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.