Dominion Energy, Inc. (NYSE:D) Goes Ex-Dividend Soon

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Dominion Energy, Inc. (NYSE:D) is about to go ex-dividend in just four days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. 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 Dominion Energy's shares on or after the 28th of February will not receive the dividend, which will be paid on the 20th of March.

The company's upcoming dividend is US$0.6675 a share, following on from the last 12 months, when the company distributed a total of US$2.67 per share to shareholders. Looking at the last 12 months of distributions, Dominion Energy has a trailing yield of approximately 4.6% on its current stock price of US$57.43. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

See our latest analysis for Dominion Energy

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Dominion Energy distributed an unsustainably high 116% of its profit as dividends to shareholders last year. Without extenuating circumstances, we'd consider the dividend at risk of a cut. Dominion Energy paid a dividend despite reporting negative free cash flow over the last twelve months. This may be due to heavy investment in the business, but this is still suboptimal from a dividend sustainability perspective.

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

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. It's encouraging to see Dominion Energy has grown its earnings rapidly, up 24% a year for the past five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Dominion Energy has delivered an average of 1.1% per year annual increase in its dividend, based on the past 10 years of dividend payments. It's good to see both earnings and the dividend have improved - although the former has been rising much quicker than the latter, possibly due to the company reinvesting more of its profits in growth.

The Bottom Line

Is Dominion Energy an attractive dividend stock, or better left on the shelf? We're not enthused to see Dominion Energy's dividend was not well covered by earnings over the last year, although it is great to see earnings growing. In summary, Dominion Energy appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

While it's tempting to invest in Dominion Energy for the dividends alone, you should always be mindful of the risks involved. For example, we've found 2 warning signs for Dominion Energy that we recommend you consider before investing in the business.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield 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.