Wyndham Hotels & Resorts, Inc. (NYSE:WH) Is About To Go Ex-Dividend, And It Pays A 1.4% Yield

Wyndham Hotels & Resorts, Inc. (NYSE:WH) is about to trade ex-dividend in the next 4 days. 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. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. This means that investors who purchase Wyndham Hotels & Resorts' shares on or after the 14th of September will not receive the dividend, which will be paid on the 29th of September.

The company's next dividend payment will be US$0.24 per share, and in the last 12 months, the company paid a total of US$0.64 per share. Calculating the last year's worth of payments shows that Wyndham Hotels & Resorts has a trailing yield of 1.4% on the current share price of $70.54. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Wyndham Hotels & Resorts has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Wyndham Hotels & Resorts

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. Wyndham Hotels & Resorts paid out a comfortable 40% of its profit last year. 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 18% of its cash flow last year.

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.

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

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. Wyndham Hotels & Resorts's earnings per share have fallen at approximately 19% a year over the previous five years. Ultimately, when earnings per share decline, the size of the pie from which dividends can be paid, shrinks.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Wyndham Hotels & Resorts's dividend payments per share have declined at 1.4% per year on average over the past three years, which is uninspiring.

The Bottom Line

Is Wyndham Hotels & Resorts worth buying for its dividend? Earnings per share are down meaningfully, although at least the company is paying out a low and conservative percentage of both its earnings and cash flow. It's definitely not great to see earnings falling, but at least there may be some buffer before the dividend needs to be cut. All things considered, we are not particularly enthused about Wyndham Hotels & Resorts from a dividend perspective.

While it's tempting to invest in Wyndham Hotels & Resorts for the dividends alone, you should always be mindful of the risks involved. For example, we've found 2 warning signs for Wyndham Hotels & Resorts (1 is potentially serious!) that deserve your attention before investing in the shares.

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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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.
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