Silvercrest Asset Management Group (NASDAQ:SAMG) Could Be A Buy For Its Upcoming Dividend

Readers hoping to buy Silvercrest Asset Management Group Inc. (NASDAQ:SAMG) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Accordingly, Silvercrest Asset Management Group investors that purchase the stock on or after the 7th of March will not receive the dividend, which will be paid on the 15th of March.

The company's next dividend payment will be US$0.19 per share, and in the last 12 months, the company paid a total of US$0.76 per share. Based on the last year's worth of payments, Silvercrest Asset Management Group stock has a trailing yield of around 4.5% on the current share price of US$16.94. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether Silvercrest Asset Management Group can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Silvercrest Asset Management Group

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Silvercrest Asset Management Group has a low and conservative payout ratio of just 2.5% of its income after tax.

Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.

Click here to see how much of its profit Silvercrest Asset Management Group paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. For this reason, we're glad to see Silvercrest Asset Management Group's earnings per share have risen 13% per annum over the last five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, 10 years ago, Silvercrest Asset Management Group has lifted its dividend by approximately 4.7% a year on average. It's good to see both earnings and the dividend have improved - although the former has been rising much quicker than the latter, possibly due to the company reinvesting more of its profits in growth.

The Bottom Line

Is Silvercrest Asset Management Group an attractive dividend stock, or better left on the shelf? When companies are growing rapidly and retaining a majority of the profits within the business, it's usually a sign that reinvesting earnings creates more value than paying dividends to shareholders. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. In summary, Silvercrest Asset Management Group appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

While it's tempting to invest in Silvercrest Asset Management Group for the dividends alone, you should always be mindful of the risks involved. Case in point: We've spotted 1 warning sign for Silvercrest Asset Management Group you should be aware of.

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.