Just 3 Days Before Mincon Group plc (LON:MCON) Will Be Trading Ex-Dividend

Mincon Group plc (LON:MCON) stock is about to trade ex-dividend in 3 days time. If you purchase the stock on or after the 28th of May, you won't be eligible to receive this dividend, when it is paid on the 19th of June.

Mincon Group's next dividend payment will be UK£0.011 per share, on the back of last year when the company paid a total of UK£0.021 to shareholders. Looking at the last 12 months of distributions, Mincon Group has a trailing yield of approximately 2.6% on its current stock price of £0.735. 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! 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 Mincon Group

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. That's why it's good to see Mincon Group paying out a modest 36% of its earnings. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Over the past year it paid out 139% of its free cash flow as dividends, which is uncomfortably high. We're curious about why the company paid out more cash than it generated last year, since this can be one of the early signs that a dividend may be unsustainable.

Mincon Group paid out less in dividends than it reported in profits, but unfortunately it didn't generate enough cash to cover the dividend. Cash is king, as they say, and were Mincon Group to repeatedly pay dividends that aren't well covered by cashflow, we would consider this a warning sign.

Click here to see how much of its profit Mincon Group paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. With that in mind, we're encouraged by the steady growth at Mincon Group, with earnings per share up 5.8% on average over the last five years. Earnings have been growing at a steady rate, but we're concerned dividend payments consumed most of the company's cash flow over the past year.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Mincon Group has delivered an average of 1.0% per year annual increase in its dividend, based on the past five years of dividend payments.

Final Takeaway

Is Mincon Group worth buying for its dividend? Mincon Group delivered reasonable earnings per share growth in recent times, and paid out less than half its profits and 139% of its cash flow over the last year, which is a mediocre outcome. It might be worth researching if the company is reinvesting in growth projects that could grow earnings and dividends in the future, but for now we're not all that optimistic on its dividend prospects.

However if you're still interested in Mincon Group as a potential investment, you should definitely consider some of the risks involved with Mincon Group. To help with this, we've discovered 1 warning sign for Mincon Group that you should be aware of before investing in their shares.

If you're in the market for dividend stocks, we recommend checking our list of top 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.