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. This means that investors who purchase shares on or after the 23rd of August will not receive the dividend, which will be paid on the 16th of September.
Assurant’s next dividend payment will be US$0.60 per share. Last year, in total, the company distributed US$2.40 to shareholders. Looking at the last 12 months of distributions, Assurant has a trailing yield of approximately 1.9% on its current stock price of $124.53. We love seeing companies pay a dividend, but it’s also important to be sure that laying the golden eggs isn’t going to kill our golden goose! We need to see whether the dividend is covered by earnings and if it’s 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. That’s why it’s good to see Assurant paying out a modest 40% 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?
Companies that aren’t growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If earnings fall far enough, the company could be forced to cut its dividend. It’s not encouraging to see that Assurant’s earnings are effectively flat over the past five years. We’d take that over an earnings decline any day, but in the long run, the best dividend stocks all grow their earnings per share.
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, Assurant has lifted its dividend by approximately 16% a year on average.
To Sum It Up
Has Assurant got what it takes to maintain its dividend payments? Assurant’s earnings per share have not grown at all in recent years, although we like that it is paying out a low percentage of its earnings. 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.
Ever wonder what the future holds for Assurant? See what the four analysts we track 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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. Thank you for reading.