Some investors rely on dividends for growing their wealth, and if you’re one of those dividend sleuths, you might be intrigued to know that Gamma Communications plc (LON:GAMA) is about to go ex-dividend in just 3 days. The ex-dividend date generally occurs two days 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. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. Thus, you can purchase Gamma Communications’ shares before the 28th of May in order to receive the dividend, which the company will pay on the 18th of June.
The company’s next dividend payment will be UK£0.148 per share. Last year, in total, the company distributed UK£0.22 to shareholders. Based on the last year’s worth of payments, Gamma Communications stock has a trailing yield of around 2.3% on the current share price of UK£9.835. If you buy this business for its dividend, you should have an idea of whether Gamma Communications’s dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.
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. Gamma Communications paid out a comfortable 32% of its profit last year. 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. It distributed 29% of its free cash flow as dividends, a comfortable payout level for most companies.
It’s positive to see that Gamma Communications’s dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.
Check out our latest analysis for Gamma Communications
Click here to see the company’s payout ratio, plus analyst estimates of its future dividends.
LSE:GAMA Historic Dividend May 24th 2026 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. That explains why we’re not overly excited about Gamma Communications’s flat earnings 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. Recent earnings growth has been limited. However, companies that see their growth slow can often choose to pay out a greater percentage of earnings to shareholders, which could see the dividend continue to rise.
Many investors will assess a company’s dividend performance by evaluating how much the dividend payments have changed over time. In the last 10 years, Gamma Communications has lifted its dividend by approximately 18% a year on average.
The Bottom Line
Is Gamma Communications an attractive dividend stock, or better left on the shelf? Earnings per share have been flat over this time, but we’re intrigued to see that Gamma Communications is paying out less than half its earnings and cash flow as dividends. This is interesting for a few reasons, as it suggests management may be reinvesting heavily in the business, but it also provides room to increase the dividend in time. We would prefer to see earnings growing faster, but the best dividend stocks over the long term typically combine strong earnings per share growth with a low payout ratio, and Gamma Communications is halfway there. It’s a promising combination that should mark this company worthy of closer attention.
Wondering what the future holds for Gamma Communications? See what the seven analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow
Generally, we wouldn’t recommend just buying the first dividend stock you see. Here’s a curated list of interesting stocks that are strong dividend payers.
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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.