It looks like Everest Re Group, Ltd. (NYSE:RE) is about to go ex-dividend in the next 4 days. Investors can purchase shares before the 3rd of September in order to be eligible for this dividend, which will be paid on the 18th of September.
Everest Re Group's next dividend payment will be US$1.40 per share, and in the last 12 months, the company paid a total of US$5.60 per share. Calculating the last year's worth of payments shows that Everest Re Group has a trailing yield of 2.3% on the current share price of $239.51. If you buy this business for its dividend, you should have an idea of whether Everest Re Group's dividend is reliable and sustainable. So we need to investigate whether Everest Re Group can afford its dividend, and if the dividend could grow.
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. That's why it's good to see Everest Re Group paying out a modest 43% of its earnings.
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 falling earnings are riskier for dividend shareholders. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Readers will understand then, why we're concerned to see Everest Re Group's earnings per share have dropped 13% a year over the past five years. Ultimately, when earnings per share decline, the size of the pie from which dividends can be paid, shrinks.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the past ten years, Everest Re Group has increased its dividend at approximately 11% a year on average.
Is Everest Re Group worth buying for its dividend? Everest Re Group's earnings per share are down over the past five years, although it has the cushion of a low payout ratio, which would suggest a cut to the dividend is relatively unlikely. At best we would put it on a watch-list to see if business conditions improve, as it doesn't look like a clear opportunity right now.
Wondering what the future holds for Everest Re Group? See what the seven analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow
We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
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.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Thank you for reading.