Don't Race Out To Buy Delek US Holdings, Inc. (NYSE:DK) Just Because It's Going Ex-Dividend

Delek US Holdings, Inc. (NYSE:DK) is about to trade ex-dividend in the next 3 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. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Accordingly, Delek US Holdings investors that purchase the stock on or after the 3rd of March will not receive the dividend, which will be paid on the 10th of March.

The company's next dividend payment will be US$0.255 per share, on the back of last year when the company paid a total of US$1.02 to shareholders. Based on the last year's worth of payments, Delek US Holdings has a trailing yield of 6.7% on the current stock price of US$15.12. 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 Delek US Holdings can afford its dividend, and if the dividend could grow.

View our latest analysis for Delek US Holdings

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. Delek US Holdings paid a dividend last year despite being unprofitable. This might be a one-off event, but it's not a sustainable state of affairs in the long run. Delek US Holdings paid a dividend despite reporting negative free cash flow over the last twelve months. This may be due to heavy investment in the business, but this is still suboptimal from a dividend sustainability perspective.

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

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 earnings fall far enough, the company could be forced to cut its dividend. Delek US Holdings reported a loss last year, and the general trend suggests its earnings have also been declining in recent years, making us wonder if the dividend is at risk.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Delek US Holdings's dividend payments are effectively flat on where they were 10 years ago.

We update our analysis on Delek US Holdings every 24 hours, so you can always get the latest insights on its financial health, here.

To Sum It Up

Is Delek US Holdings an attractive dividend stock, or better left on the shelf? These characteristics don't generally lead to outstanding dividend performance, and investors may not be happy with the results of owning this stock for its dividend.

With that being said, if you're still considering Delek US Holdings as an investment, you'll find it beneficial to know what risks this stock is facing. In terms of investment risks, we've identified 2 warning signs with Delek US Holdings and understanding them should be part of your investment process.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield 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.