Crawford & Company (NYSE:CRD.B) Passed Our Checks, And It's About To Pay A US$0.06 Dividend
Readers hoping to buy Crawford & Company (NYSE:CRD.B) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. 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. Therefore, if you purchase Crawford's shares on or after the 28th of May, you won't be eligible to receive the dividend, when it is paid on the 11th of June.
The company's next dividend payment will be US$0.06 per share. Last year, in total, the company distributed US$0.17 to shareholders. Calculating the last year's worth of payments shows that Crawford has a trailing yield of 1.8% on the current share price of $9.34. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether Crawford can afford its dividend, and if the dividend could grow.
See our latest analysis for Crawford
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Crawford has a low and conservative payout ratio of just 21% of its income after tax.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That's why it's comforting to see Crawford's earnings have been skyrocketing, up 22% per annum for the past five years.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Crawford has delivered an average of 7.8% per year annual increase in its dividend, based on the past 10 years of dividend payments. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.
Final Takeaway
Has Crawford got what it takes to maintain its dividend payments? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. This strategy can add significant value to shareholders over the long term - as long as it's done without issuing too many new shares. We think this is a pretty attractive combination, and would be interested in investigating Crawford more closely.
In light of that, while Crawford has an appealing dividend, it's worth knowing the risks involved with this stock. Be aware that Crawford is showing 3 warning signs in our investment analysis, and 1 of those is concerning...
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.
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. 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.
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