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Don't Race Out To Buy Kingstone Companies, Inc. (NASDAQ:KINS) Just Because It's Going Ex-Dividend

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Simply Wall St
·3 min read
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Kingstone Companies, Inc. (NASDAQ:KINS) is about to trade ex-dividend in the next four days. Ex-dividend means that investors that purchase the stock on or after the 25th of February will not receive this dividend, which will be paid on the 15th of March.

Kingstone Companies's upcoming dividend is US$0.04 a share, following on from the last 12 months, when the company distributed a total of US$0.16 per share to shareholders. Calculating the last year's worth of payments shows that Kingstone Companies has a trailing yield of 2.2% on the current share price of $7.38. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to investigate whether Kingstone Companies can afford its dividend, and if the dividend could grow.

See our latest analysis for Kingstone Companies

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Kingstone Companies reported a loss last year, so it's not great to see that it has continued paying a dividend. Kingstone Companies paid a dividend despite reporting negative free cash flow over the last twelve months. This may be due to heavy investment in the business, but this is still suboptimal from a dividend sustainability perspective.

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?

Businesses with shrinking earnings are tricky from a dividend perspective. 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 five 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 10 years, Kingstone Companies has lifted its dividend by approximately 2.9% 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

Has Kingstone Companies got what it takes to maintain its dividend payments? 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. This is not an overtly appealing combination of characteristics, and we're just not that interested in this company's dividend.

With that being said, if you're still considering Kingstone Companies as an investment, you'll find it beneficial to know what risks this stock is facing. Case in point: We've spotted 2 warning signs for Kingstone Companies you should be aware of.

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.

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.