April 22, 2024
Finance

Don’t Race Out To Buy MA Financial Group Limited (ASX:MAF) Just Because It’s Going Ex-Dividend


MA Financial Group Limited (ASX:MAF) stock is about to trade ex-dividend in couple of days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company’s books to be eligible for a dividend payment. 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. Therefore, if you purchase MA Financial Group’s shares on or after the 27th of February, you won’t be eligible to receive the dividend, when it is paid on the 20th of March.

The company’s next dividend payment will be AU$0.14 per share, and in the last 12 months, the company paid a total of AU$0.20 per share. Last year’s total dividend payments show that MA Financial Group has a trailing yield of 4.5% on the current share price of AU$4.42. 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 MA Financial Group

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. MA Financial Group paid out 112% of profit in the past year, which we think is typically not sustainable unless there are mitigating characteristics such as unusually strong cash flow or a large cash balance.

Generally, the higher a company’s payout ratio, the more the dividend is at risk of being reduced.

Click here to see the company’s payout ratio, plus analyst estimates of its future dividends.

historic-dividendhistoric-dividend

historic-dividend

Have Earnings And Dividends Been Growing?

Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. With that in mind, we’re not enthused to see that MA Financial Group’s earnings per share have remained effectively flat 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.

Another key way to measure a company’s dividend prospects is by measuring its historical rate of dividend growth. In the past six years, MA Financial Group has increased its dividend at approximately 19% a year on average.

The Bottom Line

Is MA Financial Group an attractive dividend stock, or better left on the shelf? Earnings per share have not grown at all and MA Financial Group is paying out an uncomfortably high percentage of its profit as dividends. These characteristics don’t generally lead to outstanding dividend performance, and investors may not be happy with the results of owning this stock for its dividend.

With that in mind though, if the poor dividend characteristics of MA Financial Group don’t faze you, it’s worth being mindful of the risks involved with this business. To that end, you should learn about the 3 warning signs we’ve spotted with MA Financial Group (including 2 which are a bit concerning).

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

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.



Source link

Leave a Reply

Your email address will not be published. Required fields are marked *

SUBSCRIBE TO OUR NEWSLETTER

Get our latest downloads and information first.
Complete the form below to subscribe to our weekly newsletter.


100% secure your website.