UWM Holdings (NYSE:UWMC) Is Due To Pay A Dividend Of $0.10

UWM Holdings Corporation (NYSE:UWMC) has announced that it will pay a dividend of $0.10 per share on the 11th of April. This makes the dividend yield 8.3%, which will augment investor returns quite nicely.

Check out our latest analysis for UWM Holdings

UWM Holdings' Dividend Forecasted To Be Well Covered By Earnings

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable.

UWM Holdings has a short history of paying out dividends, with its current track record at only 2 years. Diving into the company's earnings report, the payout ratio is set at 89%, which is a decent ratio of dividend payout to earnings, and may sustain future dividends if the company stays at its current trend.

EPS is set to grow by 41.9% over the next 3 years. Likewise, analysts forecast that the future payout ratio could reach 82% over that same time period. This is definitely on the higher side, but we wouldn't necessarily say this is unsustainable.

UWM Holdings Doesn't Have A Long Payment History

The dividend has been pretty stable looking back, but the company hasn't been paying one for very long. This makes it tough to judge how it would fare through a full economic cycle. The last annual payment of $0.40 was flat on the annual payment from2 years ago. We like that the dividend hasn't been shrinking. However we're conscious that the company hasn't got an overly long track record of dividend payments yet, which makes us wary of relying on its dividend income.

Dividend Growth Potential Is Shaky

The company's investors will be pleased to have been receiving dividend income for some time. However, initial appearances might be deceiving. UWM Holdings' earnings per share has fallen 54% over the past year. Reduced dividend payments are a common consequence of declining earnings. However, we would never make any decisions based on only a single year of data, especially when assessing long term dividend potential.

Our Thoughts On UWM Holdings' Dividend

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. The payments are bit high to be considered sustainable, and the track record isn't the best. We would probably look elsewhere for an income investment.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Just as an example, we've come across 2 warning signs for UWM Holdings you should be aware of, and 1 of them is a bit unpleasant. Is UWM Holdings not quite the opportunity you were looking for? Why not check out our selection of top 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.