Don't Race Out To Buy AXIS Capital Holdings Limited (NYSE:AXS) Just Because It's Going Ex-Dividend

AXIS Capital Holdings Limited (NYSE:AXS) stock is about to trade ex-dividend in four days. You will need to purchase shares before the 30th of March to receive the dividend, which will be paid on the 15th of April.

AXIS Capital Holdings's next dividend payment will be US$0.42 per share, on the back of last year when the company paid a total of US$1.68 to shareholders. Last year's total dividend payments show that AXIS Capital Holdings has a trailing yield of 3.3% on the current share price of $50.41. 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 check whether the dividend payments are covered, and if earnings are growing.

Check out our latest analysis for AXIS Capital Holdings

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. AXIS Capital 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.

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

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. AXIS Capital 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.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last 10 years, AXIS Capital Holdings has lifted its dividend by approximately 7.2% a year on average.

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

To Sum It Up

Is AXIS Capital Holdings an attractive dividend stock, or better left on the shelf? First, it's not great to see the company paying a dividend despite being loss-making over the last year. Worse, the general trend in its earnings looks negative in recent years. AXIS Capital Holdings doesn't appear to have a lot going for it, and we're not inclined to take a risk on owning it for the dividend.

Having said that, if you're looking at this stock without much concern for the dividend, you should still be familiar of the risks involved with AXIS Capital Holdings. To help with this, we've discovered 1 warning sign for AXIS Capital Holdings that you should be aware of before investing in their shares.

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.

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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. 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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