Some investors rely on dividends to grow their wealth. If you're also a dividend expert, you might want to know: Australian United Investment Company Limited (ASX:AUI) is about to go ex-dividend in just four days. Typically, the ex-dividend date is one business day before the record date, which is the date on which the company determines which shareholders are eligible to receive dividends. The ex-dividend date is important because trades in the stock must be settled before the record date in order to receive the dividend. This means that you must purchase Australian United Investments shares by February 22nd to receive the dividend, which will be paid on March 15th.
The company's next dividend payment will be AU$0.17 per share, and in the last 12 months, the company paid a total of AU$0.37 per share. Looking at the last 12 months of distributions, Australian United Investments has a yield of approximately 3.7% on its current share price of AU$10.13. If you buy this business for its dividend, you need to understand whether Australian United Investments's dividend is reliable and sustainable. So we need to investigate whether Australian United Investments can afford its dividend, and if the dividend could grow.
Check out our latest analysis for Australian United Investments.
Dividends are typically paid out of company profits, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Last year, Australian United Investments paid out 92% of its profit as dividends, which is more than we're comfortable with, especially when the company needs to reinvest in its business.
Generally, the higher the dividend payout ratio, the higher the risk of a dividend cut.
Click here to see how much profit Australian United Investments paid out in the last 12 months.
Are profits and dividends growing?
There is value in companies that aren't growing earnings, but if you think a company will struggle to grow, then assessing the sustainability of its dividend is even more important. If profits decline significantly, the company may be forced to cut its dividend. With that in mind, we're not pleased to see Australian United Investments's earnings per share have remained essentially flat over the past five years. Sure, it's better than falling off a cliff, but the best dividend stocks grow profits significantly over the long term.
Another important way to measure a company's dividend prospects is by measuring its historical dividend growth rate. Over the past 10 years, Australian United Investments has increased its dividend by an average of around 2.3% per year.
conclusion
Is Australian United Investments worth buying for its dividend? While we're happy to see that the company's earnings aren't shrinking, we're not happy with the fact that it paid out 92% of its revenue over the last year. do not have. This isn't a very attractive combination of features, and we're not all that interested in this company's dividend.
However, with that in mind, if you're not swayed by Australian United Investments' poor dividend profile, it's worth being mindful of the risks involved with this business.Every company has risks, and we found that 1 warning sign for Australian United Investments you should know about.
If you're in the market looking for high dividends, we recommend: Check out our selection of high-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 using only unbiased methodologies, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.
