U.S. markets open in 4 hours 8 minutes
  • S&P Futures

    4,136.00
    +29.00 (+0.71%)
     
  • Dow Futures

    34,117.00
    +179.00 (+0.53%)
     
  • Nasdaq Futures

    13,243.25
    +143.00 (+1.09%)
     
  • Russell 2000 Futures

    2,186.00
    +17.40 (+0.80%)
     
  • Crude Oil

    64.43
    +0.61 (+0.96%)
     
  • Gold

    1,837.10
    +13.10 (+0.72%)
     
  • Silver

    27.09
    +0.05 (+0.19%)
     
  • EUR/USD

    1.2117
    +0.0032 (+0.27%)
     
  • 10-Yr Bond

    1.6680
    0.0000 (0.00%)
     
  • Vix

    21.58
    -6.01 (-21.78%)
     
  • GBP/USD

    1.4062
    +0.0011 (+0.08%)
     
  • USD/JPY

    109.3360
    -0.0980 (-0.09%)
     
  • BTC-USD

    50,432.48
    +257.55 (+0.51%)
     
  • CMC Crypto 200

    1,394.66
    +6.76 (+0.49%)
     
  • FTSE 100

    7,013.33
    +50.00 (+0.72%)
     
  • Nikkei 225

    28,084.47
    +636.46 (+2.32%)
     

Dividend Investors: Don't Be Too Quick To Buy Wabash National Corporation (NYSE:WNC) For Its Upcoming Dividend

  • Oops!
    Something went wrong.
    Please try again later.
Simply Wall St
·3 min read
  • Oops!
    Something went wrong.
    Please try again later.

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 Wabash National Corporation (NYSE:WNC) is about to go ex-dividend in just four days. Investors can purchase shares before the 7th of April in order to be eligible for this dividend, which will be paid on the 29th of April.

Wabash National's next dividend payment will be US$0.08 per share, and in the last 12 months, the company paid a total of US$0.32 per share. Last year's total dividend payments show that Wabash National has a trailing yield of 1.7% on the current share price of $18.44. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether Wabash National can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Wabash National

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. Wabash National lost money last year, so the fact that it's paying a dividend is certainly disconcerting. There might be a good reason for this, but we'd want to look into it further before getting comfortable. Considering the lack of profitability, we also need to check if the company generated enough cash flow to cover the dividend payment. If cash earnings don't cover the dividend, the company would have to pay dividends out of cash in the bank, or by borrowing money, neither of which is long-term sustainable. What's good is that dividends were well covered by free cash flow, with the company paying out 17% of its cash flow last year.

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

historic-dividend
historic-dividend

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Wabash National reported a loss last year, and the general trend suggests its earnings have also been declining in recent years, making us wonder if the dividend is at risk.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, four years ago, Wabash National has lifted its dividend by approximately 7.5% a year on average.

Get our latest analysis on Wabash National's balance sheet health here.

Final Takeaway

From a dividend perspective, should investors buy or avoid Wabash National? We're a bit uncomfortable with it paying a dividend while being loss-making. However, we note that the dividend was covered by cash flow. With the way things are shaping up from a dividend perspective, we'd be inclined to steer clear of Wabash National.

With that in mind though, if the poor dividend characteristics of Wabash National don't faze you, it's worth being mindful of the risks involved with this business. Every company has risks, and we've spotted 3 warning signs for Wabash National (of which 1 is a bit concerning!) you should know about.

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.

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