Only Four Days Left To Cash In On Hennessy Advisors' (NASDAQ:HNNA) Dividend

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Hennessy Advisors, Inc. (NASDAQ:HNNA) is about to trade ex-dividend in the next 4 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 because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Meaning, you will need to purchase Hennessy Advisors' shares before the 20th of August to receive the dividend, which will be paid on the 4th of September.

The company's next dividend payment will be US$0.1375 per share, and in the last 12 months, the company paid a total of US$0.55 per share. Based on the last year's worth of payments, Hennessy Advisors stock has a trailing yield of around 5.1% on the current share price of US$10.70. 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! As a result, readers should always check whether Hennessy Advisors has been able to grow its dividends, or if the dividend might be cut.

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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. Fortunately Hennessy Advisors's payout ratio is modest, at just 43% of profit.

When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.

See our latest analysis for Hennessy Advisors

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

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If earnings fall far enough, the company could be forced to cut its dividend. So we're not too excited that Hennessy Advisors's earnings are down 2.3% a year over the past five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Hennessy Advisors has delivered 15% dividend growth per year on average over the past 10 years.

The Bottom Line

Is Hennessy Advisors an attractive dividend stock, or better left on the shelf? Hennessy Advisors's earnings per share are down over the past five years, although it has the cushion of a low payout ratio, which would suggest a cut to the dividend is relatively unlikely. It doesn't appear an outstanding opportunity, but could be worth a closer look.

If you're not too concerned about Hennessy Advisors's ability to pay dividends, you should still be mindful of some of the other risks that this business faces. Our analysis shows 2 warning signs for Hennessy Advisors that we strongly recommend you have a look at before investing in the company.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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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.