Readers hoping to buy Lifetime Brands, Inc. (NASDAQ:LCUT) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. You can purchase shares before the 31st of July in order to receive the dividend, which the company will pay on the 15th of August.
Lifetime Brands’s next dividend payment will be US$0.043 per share, and in the last 12 months, the company paid a total of US$0.17 per share. Last year’s total dividend payments show that Lifetime Brands has a trailing yield of 1.9% on the current share price of $8.8. 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! As a result, readers should always check whether Lifetime Brands has been able to grow its dividends, or if the dividend might be cut.
Check out our latest analysis for Lifetime Brands
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. Lifetime Brands paid out more than half (69%) of its earnings last year, which is a regular payout ratio for most companies. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. What’s good is that dividends were well covered by free cash flow, with the company paying out 20% of its cash flow last year.
It’s positive to see that Lifetime Brands’s dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.
Click here to see how much of its profit Lifetime Brands paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Companies with falling earnings are riskier for dividend shareholders. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Lifetime Brands’s earnings per share have fallen at approximately 20% a year over the previous 5 years. Ultimately, when earnings per share decline, the size of the pie from which dividends can be paid, shrinks.
Many investors will assess a company’s dividend performance by evaluating how much the dividend payments have changed over time. Lifetime Brands has seen its dividend decline 3.8% per annum on average over the past 10 years, which is not great to see. While it’s not great that earnings and dividends per share have fallen in recent years, we’re encouraged by the fact that management has trimmed the dividend rather than risk over-committing the company in a risky attempt to maintain yields to shareholders.
Final Takeaway
From a dividend perspective, should investors buy or avoid Lifetime Brands? We’re not enthused by the declining earnings per share, although at least the company’s payout ratio is within a reasonable range, meaning it may not be at imminent risk of a dividend cut. Overall, it’s hard to get excited about Lifetime Brands from a dividend perspective.
Keen to explore more data on Lifetime Brands’s financial performance? Check out our visualisation of its historical revenue and earnings growth.
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.
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If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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.