4 Days Left Until Nu Skin Enterprises, Inc. (NYSE:NUS) Trades Ex-Dividend

Nu Skin Enterprises, Inc. (NYSE:NUS) stock is about to trade ex-dividend in 4 days time. You can purchase shares before the 27th of February in order to receive the dividend, which the company will pay on the 11th of March.

Nu Skin Enterprises's upcoming dividend is US$0.38 a share, following on from the last 12 months, when the company distributed a total of US$1.50 per share to shareholders. Looking at the last 12 months of distributions, Nu Skin Enterprises has a trailing yield of approximately 5.0% on its current stock price of $29.84. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether Nu Skin Enterprises has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Nu Skin Enterprises

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Fortunately Nu Skin Enterprises's payout ratio is modest, at just 47% of profit. A useful secondary check can be to evaluate whether Nu Skin Enterprises generated enough free cash flow to afford its dividend. Over the last year it paid out 73% of its free cash flow as dividends, within the usual range for most companies.

It's positive to see that Nu Skin Enterprises's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That explains why we're not overly excited about Nu Skin Enterprises's flat earnings over the past five years. Better than seeing them fall off a cliff, for sure, but the best dividend stocks grow their earnings meaningfully over the long run.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the past ten years, Nu Skin Enterprises has increased its dividend at approximately 13% a year on average.

To Sum It Up

Is Nu Skin Enterprises worth buying for its dividend? Earnings per share are down very slightly in recent times, and Nu Skin Enterprises paid out less half its profit and more than half its cash flow as dividends, which is not the worst combination but could be better. It might be worth researching if the company is reinvesting in growth projects that could grow earnings and dividends in the future, but for now we're not all that optimistic on its dividend prospects.

Curious what other investors think of Nu Skin Enterprises? See what analysts are forecasting, with this visualisation of its historical and future estimated earnings and cash flow.

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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.