It looks like Artisan Partners Asset Management Inc. (NYSE:APAM) is about to go ex-dividend in the next four days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order 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. Therefore, if you purchase Artisan Partners Asset Management's shares on or after the 16th of August, you won't be eligible to receive the dividend, when it is paid on the 31st of August.
The company's next dividend payment will be US$1.00 per share, on the back of last year when the company paid a total of US$3.99 to shareholders. Calculating the last year's worth of payments shows that Artisan Partners Asset Management has a trailing yield of 7.6% on the current share price of $52.29. 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 Artisan Partners Asset Management can afford its dividend, and if the dividend could grow.
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. It paid out 78% of its earnings as dividends last year, which is not unreasonable, but limits reinvestment in the business and leaves the dividend vulnerable to a business downturn. It could become a concern if earnings started to decline.
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.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. It's encouraging to see Artisan Partners Asset Management has grown its earnings rapidly, up 21% a year for the past five years.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the past eight years, Artisan Partners Asset Management has increased its dividend at approximately 11% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.
Is Artisan Partners Asset Management an attractive dividend stock, or better left on the shelf? Earnings per share are growing at an attractive rate, and Artisan Partners Asset Management is paying out a bit over half its profits. Overall, Artisan Partners Asset Management looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
In light of that, while Artisan Partners Asset Management has an appealing dividend, it's worth knowing the risks involved with this stock. To help with this, we've discovered 3 warning signs for Artisan Partners Asset Management that you should be aware of before investing in their 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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