It looks like RA International Group PLC (LON:RAI) is about to go ex-dividend in the next 4 days. Investors can purchase shares before the 28th of May in order to be eligible for this dividend, which will be paid on the 9th of July.
RA International Group's next dividend payment will be UK£0.013 per share, on the back of last year when the company paid a total of UK£0.015 to shareholders. Based on the last year's worth of payments, RA International Group stock has a trailing yield of around 3.0% on the current share price of £0.415. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. We need to see whether the dividend is covered by earnings and if it's growing.
View our latest analysis for RA International Group
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. RA International Group is paying out just 22% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. A useful secondary check can be to evaluate whether RA International Group generated enough free cash flow to afford its dividend.
Click here to see how much of its profit RA International Group paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. 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 RA International Group has grown its earnings rapidly, up 58% a year for the past five years.
Unfortunately RA International Group has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.
To Sum It Up
Is RA International Group worth buying for its dividend? We're glad to see the company has been improving its earnings per share while also paying out a low percentage of income. However, it's not great to see it paying out what we see as an uncomfortably high percentage of its cash flow. To summarise, RA International Group looks okay on this analysis, although it doesn't appear a stand-out opportunity.
In light of that, while RA International Group has an appealing dividend, it's worth knowing the risks involved with this stock. Be aware that RA International Group is showing 4 warning signs in our investment analysis, and 1 of those doesn't sit too well with us...
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.
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This article by Simply Wall St is general in nature. 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. Thank you for reading.