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Don't Buy Kingstone Companies, Inc. (NASDAQ:KINS) For Its Next Dividend Without Doing These Checks

Simply Wall St

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 Kingstone Companies, Inc. (NASDAQ:KINS) is about to go ex-dividend in just 4 days. You will need to purchase shares before the 29th of August to receive the dividend, which will be paid on the 13th of September.

Kingstone Companies's next dividend payment will be US$0.063 per share, and in the last 12 months, the company paid a total of US$0.25 per share. Last year's total dividend payments show that Kingstone Companies has a trailing yield of 3.1% on the current share price of $8.03. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether Kingstone Companies has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Kingstone Companies

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Kingstone Companies paid a dividend last year despite being unprofitable. This might be a one-off event, but it's not a sustainable state of affairs in the long run.

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

NasdaqCM:KINS Historical Dividend Yield, August 24th 2019

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If earnings fall far enough, the company could be forced to cut its dividend. Kingstone Companies was unprofitable last year and, unfortunately, the general trend suggests its earnings have been in decline over the last 5 years, making us wonder if the dividend is sustainable at all.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last 8 years, Kingstone Companies has lifted its dividend by approximately 9.6% a year on average.

We update our analysis on Kingstone Companies every 24 hours, so you can always get the latest insights on its financial health, here.

The Bottom Line

From a dividend perspective, should investors buy or avoid Kingstone Companies? It's hard to get past the idea of Kingstone Companies paying a dividend despite reporting a loss over the past year - especially when the general trend in its earnings also looks to be negative. Kingstone Companies doesn't appear to have a lot going for it, and we're not inclined to take a risk on owning it for the dividend.

Curious what other investors think of Kingstone Companies? See what analysts are forecasting, with this visualisation of its historical and future estimated earnings and cash flow .

We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.