Emerald Holding, Inc. (NYSE:EEX) Goes Ex-Dividend Soon

Emerald Holding, Inc. (NYSE:EEX) stock is about to trade ex-dividend in 4 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. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Meaning, you will need to purchase Emerald Holding's shares before the 8th of November to receive the dividend, which will be paid on the 21st of November.

The company's next dividend payment will be US$0.015 per share. Last year, in total, the company distributed US$0.06 to shareholders. Calculating the last year's worth of payments shows that Emerald Holding has a trailing yield of 1.5% on the current share price of US$4.08. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to investigate whether Emerald Holding can afford its dividend, and if the dividend could grow.

See our latest analysis for Emerald Holding

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. Emerald Holding reported a loss after tax last year, which means it's paying a dividend despite being unprofitable. While this might be a one-off event, this is unlikely to be sustainable in the long term. With the recent loss, it's important to check if the business generated enough cash to pay its dividend. If Emerald Holding didn't generate enough cash to pay the dividend, then it must have either paid from cash in the bank or by borrowing money, neither of which is sustainable in the long term. It paid out more than half (63%) of its free cash flow in the past year, which is within an average range for most companies.

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

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. Emerald Holding was unprofitable last year, but at least the general trend suggests its earnings have been improving over the past five years. Even so, an unprofitable company whose business does not quickly recover is usually not a good candidate for dividend investors.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Emerald Holding has seen its dividend decline 20% per annum on average over the past seven years, which is not great to see.

Remember, you can always get a snapshot of Emerald Holding's financial health, by checking our visualisation of its financial health, here.

The Bottom Line

Is Emerald Holding an attractive dividend stock, or better left on the shelf? It's hard to get used to Emerald Holding paying a dividend despite reporting a loss over the past year. At least the dividend was covered by free cash flow, however. Overall, it's hard to get excited about Emerald Holding from a dividend perspective.

If you're not too concerned about Emerald Holding's ability to pay dividends, you should still be mindful of some of the other risks that this business faces. For example, Emerald Holding has 3 warning signs (and 1 which shouldn't be ignored) we think you should know about.

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

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.