Orchard Funding Group plc (LON:ORCH) will soon be ex-dividend

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Orchard Funding Group plc (LON:ORCH) The stock is set to trade ex-dividend in three days. The ex-dividend date is usually one business day before the record date which is the latest date by which you must be present on the books of the company as a shareholder in order to receive the dividend. The ex-dividend date is important because each time a stock is bought or sold, the transaction takes at least two business days to settle. This means that investors who buy shares of Orchard Funding Group on or after June 9 will not receive the dividend, which will be paid on June 24.

The company’s upcoming dividend is £0.01 per share, following the last 12 months when the company distributed a total of £0.03 per share to shareholders. Over the last 12 months of distributions, Orchard Funding Group has a yield of around 4.9% on its current share price of £0.61. If you’re buying this company for its dividend, you should get an idea of ​​the reliability and sustainability of Orchard Funding Group’s dividend. We therefore need to consider whether Orchard Funding Group can afford its dividend, and whether the dividend could increase.

Check out our latest analysis for Orchard Funding Group

Dividends are usually paid out of company profits, so if a company pays out more than it has earned, its dividend is usually at risk of being reduced. Orchard Funding Group paid out 55% of its profits to investors last year, a normal level of payout for most companies. Orchard Funding Group has paid a dividend despite negative free cash flow over the past twelve months. This may be due to heavy investments in the business, but it is still suboptimal from a dividend sustainability perspective.

When a company has paid out less in dividends than it has earned in profits, this generally suggests that its dividend is affordable. The lower the percentage of its profits it pays out, the greater the margin of safety for the dividend if the company goes into a recession.

Click here to see how much of his Orchard Funding Group profit has paid out over the past 12 months.

AIM:ORCH Historic Dividend June 5, 2022

Have earnings and dividends increased?

Stocks of companies that generate sustainable earnings growth often offer the best dividend prospects because it is easier to increase the dividend when earnings increase. If business goes into a recession and the dividend is cut, the company could see its value drop precipitously. That’s why it’s a relief to see that Orchard Funding Group’s earnings per share have grown 3.2% annually over the past five years.

Many investors will gauge a company’s dividend yield by evaluating how much dividend payouts have changed over time. Orchard Funding Group has achieved an average annual increase of 1.1% per year in its dividend, based on the last six years of dividend payments.

The essential

Has Orchard Funding Group got what it takes to maintain its dividend payments? Orchard Funding Group generated some growth in earnings per share while paying more than half of its profits to shareholders in the form of dividends. We think there are probably better opportunities out there.

If you want to dig deeper into Orchard Funding Group, it helps to know the risks this company faces. For example, Orchard Funding Group has 5 warning signs (and 3 that are a little concerning) that we think you should know about.

If you are looking for strong dividend payers, we recommend by consulting our selection of the best dividend-paying stocks.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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