AXIS Capital Holdings' (NYSE:AXS) Shareholders Will Receive A Bigger Dividend Than Last Year
AXIS Capital Holdings Limited's (NYSE:AXS) dividend will be increasing from last year's payment of the same period to $0.44 on 18th of April. This takes the dividend yield to 2.9%, which shareholders will be pleased with.
See our latest analysis for AXIS Capital Holdings
AXIS Capital Holdings' Dividend Is Well Covered By Earnings
Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. The last payment made up 76% of earnings, but cash flows were much higher. Since the dividend is just paying out cash to shareholders, we care more about the cash payout ratio from which we can see plenty is being left over for reinvestment in the business.
According to analysts, EPS should be several times higher next year. Assuming the dividend continues along recent trends, we estimate that the payout ratio could reach 19%, which is in a comfortable range for us.
AXIS Capital Holdings Has A Solid Track Record
The company has an extended history of paying stable dividends. The annual payment during the last 10 years was $0.96 in 2013, and the most recent fiscal year payment was $1.76. This implies that the company grew its distributions at a yearly rate of about 6.2% over that duration. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.
AXIS Capital Holdings Might Find It Hard To Grow Its Dividend
The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that AXIS Capital Holdings has been growing its earnings per share at 57% a year over the past five years. Earnings per share is growing nicely, but the company is paying out most of its earnings as dividends. This might be sustainable, but we wonder why AXIS Capital Holdings is not retaining those earnings to reinvest in growth.
In Summary
Overall, it's great to see the dividend being raised and that it is still in a sustainable range. The payments look pretty sustainable with good earnings coverage and a reasonable track record. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 1 warning sign for AXIS Capital Holdings that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield 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.
Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here
