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 M&G Credit Income Investment Trust plc (LON:MGCI) is about to go ex-dividend in just 3 days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Thus, you can purchase M&G Credit Income Investment Trust's shares before the 3rd of November in order to receive the dividend, which the company will pay on the 25th of November.

The company's next dividend payment will be UK£0.011 per share. Last year, in total, the company distributed UK£0.04 to shareholders. Calculating the last year's worth of payments shows that M&G Credit Income Investment Trust has a trailing yield of 4.5% on the current share price of £0.894. If you buy this business for its dividend, you should have an idea of whether M&G Credit Income Investment Trust's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.

View 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

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If earnings fall far enough, the company could be forced to cut its dividend. M&G Credit Income Investment Trust reported a loss last year, and the general trend suggests its earnings have also been declining in recent years, making us wonder if the dividend is at risk.



Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Since the start of our data, three years ago, M&G Credit Income Investment Trust has lifted its dividend by approximately 25% a year on average.

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

To Sum It Up

Should investors buy M&G Credit Income Investment Trust for the upcoming dividend? It's definitely not great to see that it paid a dividend despite reporting a loss last year. Worse, the general trend in its earnings looks negative in recent times. M&G Credit Income Investment Trust doesn't appear to have a lot going for it, and we're not inclined to take a risk on owning it for the dividend.

With that in mind though, if the poor dividend characteristics of M&G Credit Income Investment Trust don't faze you, it's worth being mindful of the risks involved with this business. In terms of investment risks, we've identified 3 warning signs with M&G Credit Income Investment Trust and understanding them should be part of your investment process.

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.

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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