Why you might be interested in Polar Capital Holdings plc (LON: POLR) for its next dividend

Some investors rely on dividends to grow their wealth, and if you’re one of those dividend sleuths, you might be intrigued to know that Polar Capital Holdings plc (LON: POLR) is set to be ex-dividend in just four days. The ex-dividend date is one working day before the registration date, which is the deadline by which shareholders must be present on the books of the company to be eligible for the payment of a dividend. The ex-dividend date is important because any share transaction must have been settled before the registration date to be eligible for a dividend. This means that investors who buy shares of Polar Capital Holdings on or after December 23 will not receive the dividend, which will be paid on January 14.

The company’s next dividend will be £ 0.14 per share, and over the past 12 months the company has paid a total of £ 0.45 per share. Based on the value of last year’s payouts, Polar Capital Holdings has a rolling 6.0% return on the current share price of £ 7.54. Dividends are an important source of income for many shareholders, but the health of the business is crucial to sustaining these dividends. Therefore, readers should always check whether Polar Capital Holdings has been able to increase its dividends or if the dividend could be reduced.

Check out our latest review for Polar Capital Holdings

Dividends are usually paid out of the company’s profits, so if a company pays more than it earned, its dividend is usually at risk of being reduced. Polar Capital Holdings pays an acceptable level of 64% of its profits, a payment level common to most companies.

Companies that pay less dividends than they earn profits generally have more sustainable dividends. The lower the payout ratio, the more leeway the company has before being forced to reduce the dividend.

Click here to view the company’s payout ratio, as well as analysts’ estimates of its future dividends.

Have profits and dividends increased?

Companies with strong growth prospects generally make the best dividend payers because dividends are easier to grow when earnings per share improve. If profits fall and the company is forced to cut its dividend, investors could see the value of their investment go up in smoke. It is encouraging to see that Polar Capital Holdings has grown its profits rapidly, rising 28% per year over the past five years.

Another key way to measure a company’s dividend outlook is to measure its historical rate of dividend growth. Over the past 10 years, Polar Capital Holdings has increased its dividend by around 20% per year on average. It is exciting to see that earnings and dividends per share have increased rapidly over the past few years.

The bottom line

Should investors buy Polar Capital Holdings for the next dividend? Earnings per share are growing at an attractive rate, and Polar Capital Holdings is paying just over half of its earnings. In summary, Polar Capital Holdings seems to have some promise as a dividend-paying stock, and we suggest you take a closer look.

Wondering what the future holds for Polar Capital Holdings? Find out what the three analysts we follow are forecasting, with this visualization of its historical and future estimated earnings and cash flow

However, we don’t recommend simply buying the first dividend stock you see. Here is a list of interesting dividend paying stocks with a yield above 2% and a dividend coming soon.

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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only 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 into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative material. Simply Wall St has no position in any of the stocks mentioned.