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Don't Buy United Insurance Holdings Corp. (NASDAQ:UIHC) For Its Next Dividend Without Doing These Checks

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Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see United Insurance Holdings Corp. (NASDAQ:UIHC) is about to trade ex-dividend in the next 4 days. If you purchase the stock on or after the 18th of November, you won't be eligible to receive this dividend, when it is paid on the 26th of November.

United Insurance Holdings's next dividend payment will be US$0.06 per share. Last year, in total, the company distributed US$0.2 to shareholders. Calculating the last year's worth of payments shows that United Insurance Holdings has a trailing yield of 1.8% on the current share price of $13.05. 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 United Insurance Holdings can afford its dividend, and if the dividend could grow.

Check out our latest analysis for United Insurance Holdings

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. United Insurance Holdings reported a loss last year, so it's not great to see that it has continued paying a dividend.

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

NasdaqCM:UIHC Historical Dividend Yield, November 13th 2019
NasdaqCM:UIHC Historical Dividend Yield, November 13th 2019

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. United Insurance Holdings 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.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, ten years ago, United Insurance Holdings has lifted its dividend by approximately 1.8% a year on average.

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

Final Takeaway

Should investors buy United Insurance Holdings for the upcoming dividend? It's hard to get past the idea of United Insurance Holdings paying a dividend despite reporting a loss over the past year - especially when the general trend in its earnings also looks to be negative. These characteristics don't generally lead to outstanding dividend performance, and investors may not be happy with the results of owning this stock for its dividend.

Ever wonder what the future holds for United Insurance Holdings? See what the four analysts we track 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.