Navient Corporation (NASDAQ:NAVI) Stock Goes Ex-Dividend In Just Four Days

Navient Corporation (NASDAQ:NAVI) is about to trade ex-dividend in the next four days. If you purchase the stock on or after the 3rd of December, you won't be eligible to receive this dividend, when it is paid on the 18th of December.

Navient's next dividend payment will be US$0.16 per share, and in the last 12 months, the company paid a total of US$0.64 per share. Looking at the last 12 months of distributions, Navient has a trailing yield of approximately 6.6% on its current stock price of $9.75. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to check whether the dividend payments are covered, and if earnings are growing.

View our latest analysis for Navient

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Navient paid out a comfortable 32% of its profit last year.

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.

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. With that in mind, we're discomforted by Navient's 6.0% per annum decline in earnings in the past five years. Such a sharp decline casts doubt on the future sustainability of the dividend.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the past 10 years, Navient has increased its dividend at approximately 4.8% a year on average.

To Sum It Up

Is Navient worth buying for its dividend? Earnings per share have shrunk noticeably in recent years, although we like that the company has a low payout ratio. This could suggest a cut to the dividend may not be a major risk in the near future. We're unconvinced on the company's merits, and think there might be better opportunities out there.

If you want to look further into Navient, it's worth knowing the risks this business faces. Our analysis shows 1 warning sign for Navient and you should be aware of it before buying any shares.

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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