There's A Lot To Like About StepStone Group's (NASDAQ:STEP) Upcoming US$0.15 Dividend

By
Simply Wall St
Published
November 24, 2021
NasdaqGS:STEP
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StepStone Group Inc. (NASDAQ:STEP) is about to trade ex-dividend in the next 4 days. 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 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. Thus, you can purchase StepStone Group's shares before the 29th of November in order to receive the dividend, which the company will pay on the 15th of December.

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. Last year's total dividend payments show that StepStone Group has a trailing yield of 1.4% on the current share price of $43.03. If you buy this business for its dividend, you should have an idea of whether StepStone Group's dividend is reliable and sustainable. So we need to investigate whether StepStone Group can afford its dividend, and if the dividend could grow.

Check out our latest analysis for StepStone Group

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. StepStone Group is paying out just 3.5% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events.

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 the company's payout ratio, plus analyst estimates of its future dividends.

historic-dividend
NasdaqGS:STEP Historic Dividend November 24th 2021

Have Earnings And Dividends Been Growing?

Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. To our modest chagrin, StepStone Group earnings per share have been effectively flat over the past year. The best dividend stocks all grow their earnings per share over the long run, but it is hard to draw strong conclusions from any one year period.

Unfortunately StepStone Group has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.

The Bottom Line

Is StepStone Group an attractive dividend stock, or better left on the shelf? StepStone Group has seen its earnings per share stagnate in recent years, although the company reinvests more than half of its profits in the business, which could bode well for its future prospects. We think this is a pretty attractive combination, and would be interested in investigating StepStone Group more closely.

On that note, you'll want to research what risks StepStone Group is facing. Every company has risks, and we've spotted 3 warning signs for StepStone Group you should know about.

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.

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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Simply Wall St is focused on providing unbiased, high-quality research coverage on every listed company in the world. Our research team consists of data scientists and multiple equity analysts with over two decades worth of financial markets experience between them.