MGIC Investment Corporation (NYSE:MTG)'s Could Be A Buy For Its Upcoming Dividend

It looks like MGIC Investment Corporation (NYSE:MTG) is about to go ex-dividend in the next 3 days. This means that investors who purchase shares on or after the 29th of August will not receive the dividend, which will be paid on the 20th of September.

MGIC Investment's upcoming dividend is US$0.06 a share, following on from the last 12 months, when the company distributed a total of US$0.24 per share to shareholders. Looking at the last 12 months of distributions, MGIC Investment has a trailing yield of approximately 1.9% on its current stock price of $12.31. 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.

See our latest analysis for MGIC Investment

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.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

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 fall far enough, the company could be forced to cut its dividend. This is why it's a relief to see MGIC Investment earnings per share are up 2.9% per annum over the last five years.

This is MGIC Investment's first year of paying a dividend, so it doesn't have much of a history yet to compare to.

To Sum It Up

Is MGIC Investment an attractive dividend stock, or better left on the shelf? It has been growing its earnings per share somewhat in recent years, although it reinvests more than half its earnings in the business, which could suggest there are some growth projects that have not yet reached fruition. Overall, MGIC Investment looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

Ever wonder what the future holds for MGIC Investment? See what the nine analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising 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 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.