Here's Why We're Wary Of Buying Blackstone's (NYSE:BX) For Its Upcoming Dividend

Blackstone Inc. (NYSE:BX) stock is about to trade ex-dividend in two days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. 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. Accordingly, Blackstone investors that purchase the stock on or after the 10th of February will not receive the dividend, which will be paid on the 18th of February.

The company's next dividend payment will be US$1.44 per share. Last year, in total, the company distributed US$3.95 to shareholders. Based on the last year's worth of payments, Blackstone has a trailing yield of 2.3% on the current stock price of US$174.55. 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 investigate whether Blackstone can afford its dividend, and if the dividend could grow.

See our latest analysis for Blackstone

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Last year Blackstone paid out 109% of its profits as dividends to shareholders, suggesting the dividend is not well covered by earnings.

When the dividend payout ratio is high, as it is in this case, the dividend is usually at greater risk of being cut in the future.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

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 fall far enough, the company could be forced to cut its dividend. This is why it's a relief to see Blackstone earnings per share are up 3.6% per annum over the last five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last 10 years, Blackstone has lifted its dividend by approximately 6.4% a year on average. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

Final Takeaway

Has Blackstone got what it takes to maintain its dividend payments? Blackstone has been growing earnings per share at a reasonable rate, but over the last year its dividend was not well covered by earnings. All things considered, we're not optimistic about its dividend prospects, and would be inclined to leave it on the shelf for now.

Although, if you're still interested in Blackstone and want to know more, you'll find it very useful to know what risks this stock faces. Our analysis shows 3 warning signs for Blackstone that we strongly recommend you have a look at before investing in the company.

If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.

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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.