Be Sure To Check Out NexLiving Communities Inc. (CVE:NXLV) Before It Goes Ex-Dividend

Readers hoping to buy NexLiving Communities Inc. (CVE:NXLV) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. In other words, investors can purchase NexLiving Communities' shares before the 5th of September in order to be eligible for the dividend, which will be paid on the 26th of September.

The company's upcoming dividend is CA$0.01 a share, following on from the last 12 months, when the company distributed a total of CA$0.04 per share to shareholders. Based on the last year's worth of payments, NexLiving Communities stock has a trailing yield of around 2.2% on the current share price of CA$1.80. If you buy this business for its dividend, you should have an idea of whether NexLiving Communities's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

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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. NexLiving Communities paid out just 6.3% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. 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. It paid out 9.0% of its free cash flow as dividends last year, which is conservatively low.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

View our latest analysis for NexLiving Communities

Click here to see how much of its profit NexLiving Communities paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. This is why it's a relief to see NexLiving Communities earnings per share are up 4.9% per annum over the last five years. Growth has been anaemic. Yet with more than 75% of its earnings being kept in the business, there is ample room to reinvest in growth or lift the payout ratio - either of which could increase the dividend.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. It looks like the NexLiving Communities dividends are largely the same as they were five years ago.

Final Takeaway

Is NexLiving Communities an attractive dividend stock, or better left on the shelf? Earnings per share growth has been growing somewhat, and NexLiving Communities is paying out less than half its earnings and cash flow as dividends. This is interesting for a few reasons, as it suggests management may be reinvesting heavily in the business, but it also provides room to increase the dividend in time. It might be nice to see earnings growing faster, but NexLiving Communities is being conservative with its dividend payouts and could still perform reasonably over the long run. NexLiving Communities looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

In light of that, while NexLiving Communities has an appealing dividend, it's worth knowing the risks involved with this stock. To that end, you should learn about the 4 warning signs we've spotted with NexLiving Communities (including 2 which shouldn't be ignored).

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.

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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.