Regular readers will know that we love our dividends at Simply Wall St, which is why it’s exciting to see Assurant, Inc. (NYSE:AIZ) is about to trade ex-dividend in the next 4 days. If you purchase the stock on or after the 21st of February, you won’t be eligible to receive this dividend, when it is paid on the 16th of March.
Assurant’s next dividend payment will be US$0.63 per share, on the back of last year when the company paid a total of US$2.52 to shareholders. Based on the last year’s worth of payments, Assurant has a trailing yield of 1.8% on the current stock price of $142.52. If you buy this business for its dividend, you should have an idea of whether Assurant’s dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. That’s why it’s good to see Assurant paying out a modest 41% of its earnings.
Generally speaking, the lower a company’s payout ratios, the more resilient its dividend usually is.
Have Earnings And Dividends Been Growing?
When earnings decline, dividend companies become much harder to analyse and own safely. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. So we’re not too excited that Assurant’s earnings are down 2.1% a year over the past five years.
Another key way to measure a company’s dividend prospects is by measuring its historical rate of dividend growth. Assurant has delivered 15% dividend growth per year on average over the past ten years.
Should investors buy Assurant for the upcoming dividend? 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. In sum this is a middling combination, and we find it hard to get excited about the company from a dividend perspective.
Curious what other investors think of Assurant? See what analysts are forecasting, with this visualisation of its historical and future estimated earnings and cash flow.
If you’re in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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