Income Investors Should Know That Heidrick & Struggles International, Inc. (NASDAQ:HSII) Goes Ex-Dividend Soon

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Heidrick & Struggles International, Inc. (NASDAQ:HSII) is about to go ex-dividend in just four days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. This means that investors who purchase Heidrick & Struggles International's shares on or after the 5th of August will not receive the dividend, which will be paid on the 20th of August.

The company's next dividend payment will be US$0.15 per share, and in the last 12 months, the company paid a total of US$0.60 per share. Based on the last year's worth of payments, Heidrick & Struggles International has a trailing yield of 1.4% on the current stock price of $42.71. If you buy this business for its dividend, you should have an idea of whether Heidrick & Struggles International's dividend is reliable and sustainable. As a result, readers should always check whether Heidrick & Struggles International has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Heidrick & Struggles International

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. It paid out 78% of its earnings as dividends last year, which is not unreasonable, but limits reinvestment in the business and leaves the dividend vulnerable to a business downturn. It could become a concern if earnings started to decline. 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. The good news is it paid out just 13% of its free cash flow in the last year.

It's positive to see that Heidrick & Struggles International'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 the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. So we're not too excited that Heidrick & Struggles International's earnings are down 3.8% a year over the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Heidrick & Struggles International has delivered an average of 1.4% per year annual increase in its dividend, based on the past 10 years of dividend payments.

To Sum It Up

Is Heidrick & Struggles International an attractive dividend stock, or better left on the shelf? 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. All things considered, we are not particularly enthused about Heidrick & Struggles International from a dividend perspective.

So if you want to do more digging on Heidrick & Struggles International, you'll find it worthwhile knowing the risks that this stock faces. For example, we've found 2 warning signs for Heidrick & Struggles International that we recommend you consider before investing in the business.

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.

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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. 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.
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