Readers hoping to buy Lombard Bank Malta p.l.c. (MTSE:LOM) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is two business days before a company’s record date in most cases, 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 can take two business days or more to settle. In other words, investors can purchase Lombard Bank Malta’s shares before the 23rd of May in order to be eligible for the dividend, which will be paid on the 10th of July.
The company’s next dividend payment will be €0.034 per share. Last year, in total, the company distributed €0.034 to shareholders. Last year’s total dividend payments show that Lombard Bank Malta has a trailing yield of 4.5% on the current share price of €0.75. If you buy this business for its dividend, you should have an idea of whether Lombard Bank Malta’s dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it’s growing.
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. That’s why it’s good to see Lombard Bank Malta paying out a modest 47% of its earnings.
When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.
Check out our latest analysis for Lombard Bank Malta
Click here to see how much of its profit Lombard Bank Malta paid out over the last 12 months.
MTSE:LOM Historic Dividend May 18th 2025 Have Earnings And Dividends Been Growing?
When earnings decline, dividend companies become much harder to analyse and own safely. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Lombard Bank Malta’s earnings per share have fallen at approximately 6.2% a year over the previous five years. Ultimately, when earnings per share decline, the size of the pie from which dividends can be paid, shrinks.
Lombard Bank Malta also issued more than 5% of its market cap in new stock during the past year, which we feel is likely to hurt its dividend prospects in the long run. Trying to grow the dividend while issuing large amounts of new shares reminds us of the ancient Greek tale of Sisyphus – perpetually pushing a boulder uphill.
Many investors will assess a company’s dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, 10 years ago, Lombard Bank Malta has lifted its dividend by approximately 6.5% a year on average.
Final Takeaway
Has Lombard Bank Malta got what it takes to maintain its dividend payments? Earnings per share have shrunk noticeably in recent years, although we like that the company has a low payout ratio. This could suggest a cut to the dividend may not be a major risk in the near future. It might be worth researching if the company is reinvesting in growth projects that could grow earnings and dividends in the future, but for now we’re on the fence about its dividend prospects.
If you want to look further into Lombard Bank Malta, it’s worth knowing the risks this business faces. Every company has risks, and we’ve spotted 2 warning signs for Lombard Bank Malta (of which 1 is concerning!) you should know about.
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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.