DICK'S Sporting Goods, Inc. (NYSE:DKS) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

DICK'S Sporting Goods, Inc. (NYSE:DKS) is about to trade ex-dividend in the next three days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. 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. This means that investors who purchase DICK'S Sporting Goods' shares on or after the 12th of September will not receive the dividend, which will be paid on the 26th of September.

The company's next dividend payment will be US$1.2125 per share, and in the last 12 months, the company paid a total of US$4.85 per share. Based on the last year's worth of payments, DICK'S Sporting Goods has a trailing yield of 2.2% on the current stock price of US$221.24. If you buy this business for its dividend, you should have an idea of whether DICK'S Sporting Goods's dividend is reliable and sustainable. As a result, readers should always check whether DICK'S Sporting Goods has been able to grow its dividends, or if the dividend might be cut.

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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 DICK'S Sporting Goods paying out a modest 31% of its earnings. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Over the last year, it paid out more than three-quarters (81%) of its free cash flow generated, which is fairly high and may be starting to limit reinvestment in the business.

It's positive to see that DICK'S Sporting Goods'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.

View our latest analysis for DICK'S Sporting Goods

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

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That's why it's comforting to see DICK'S Sporting Goods's earnings have been skyrocketing, up 34% per annum for the past five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. DICK'S Sporting Goods has delivered an average of 24% per year annual increase in its dividend, based on the past 10 years of dividend payments. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

To Sum It Up

Has DICK'S Sporting Goods got what it takes to maintain its dividend payments? Earnings per share have grown at a nice rate in recent times and over the last year, DICK'S Sporting Goods paid out less than half its earnings and a bit over half its free cash flow. It's a promising combination that should mark this company worthy of closer attention.

So while DICK'S Sporting Goods looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. For example, we've found 2 warning signs for DICK'S Sporting Goods (1 is a bit concerning!) that deserve your attention before investing in the shares.

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