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Should you buy G8 Education Ltd shares before they go ex-dividend?

It certainly has been a turbulent year for the G8 Education Ltd (ASX: GEM) share price.

But despite a 10% decline in the last three months, the childcare operator’s shares have still managed to put on a gain of approximately 3.5% year-to-date.

This means its shares are changing hands at 16x trailing earnings and providing a trailing fully franked 6.5% dividend paid quarterly.

The next quarterly dividend is due to be paid in the first week of July, with its shares set to go ex-dividend on Thursday.

Should you snap up shares before they go ex-dividend?

Whilst my preference in the childcare industry is its smaller rival Think Childcare Ltd (ASX: TNK), there’s no getting away from the fact that G8 Education pays a monster dividend.

Whilst there may be concerns over its debt burden and occupancy levels, providing things don’t deteriorate greatly from here, I believe G8 Education is capable of continuing to grow its earnings and dividend at a reasonably solid rate for the foreseeable future thanks to its ever-expanding childcare centre network.

At the last count, G8 Education had 38,713 total licensed places across its 490 centres in Australia and 20 centres in Singapore.

Due to the childcare centre market being highly fragmented, I expect there will be plenty of room for this number to grow in the future and boost its bottom line.

This could arguably make it a good option for investors in search of a regular source of income.

Finally, this is another share which I think is a great option for income investors. Its huge fully franked yield, cheap price, and solid growth prospects could make it a great investment.

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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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