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Don't Race Out To Buy M&G Credit Income Investment Trust plc (LON:MGCI) Just Because It's Going Ex-Dividend

M&G Credit Income Investment Trust plc (LON:MGCI) stock is about to trade ex-dividend in three days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order 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. Thus, you can purchase M&G Credit Income Investment Trust's shares before the 2nd of February in order to receive the dividend, which the company will pay on the 24th of February.

The company's next dividend payment will be UK£0.024 per share, and in the last 12 months, the company paid a total of UK£0.04 per share. Looking at the last 12 months of distributions, M&G Credit Income Investment Trust has a trailing yield of approximately 4.2% on its current stock price of £0.969. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether M&G Credit Income Investment Trust can afford its dividend, and if the dividend could grow.

See our latest analysis for M&G Credit Income Investment Trust

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. M&G Credit Income Investment Trust paid a dividend last year despite being unprofitable. This might be a one-off event, but it's not a sustainable state of affairs in the long run.

Click here to see how much of its profit M&G Credit Income Investment Trust paid out over the last 12 months.

historic-dividend
historic-dividend

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If earnings fall far enough, the company could be forced to cut its dividend. M&G Credit Income Investment Trust was unprofitable last year and, unfortunately, the general trend suggests its earnings have been in decline over the last three years, making us wonder if the dividend is sustainable at all.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. M&G Credit Income Investment Trust has delivered 25% dividend growth per year on average over the past three years.

Get our latest analysis on M&G Credit Income Investment Trust's balance sheet health here.

Final Takeaway

From a dividend perspective, should investors buy or avoid M&G Credit Income Investment Trust? First, it's not great to see the company paying a dividend despite being loss-making over the last year. Worse, the general trend in its earnings looks negative in recent years. 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 being said, if you're still considering M&G Credit Income Investment Trust as an investment, you'll find it beneficial to know what risks this stock is facing. To help with this, we've discovered 3 warning signs for M&G Credit Income Investment Trust that you should be aware of before investing in their shares.

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.

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