U.S. markets closed
  • S&P 500

    4,411.79
    +44.31 (+1.01%)
     
  • Dow 30

    35,061.55
    +238.20 (+0.68%)
     
  • Nasdaq

    14,836.99
    +152.39 (+1.04%)
     
  • Russell 2000

    2,209.65
    +10.17 (+0.46%)
     
  • Crude Oil

    72.17
    +0.26 (+0.36%)
     
  • Gold

    1,802.10
    -3.30 (-0.18%)
     
  • Silver

    25.24
    -0.14 (-0.56%)
     
  • EUR/USD

    1.1770
    -0.0003 (-0.02%)
     
  • 10-Yr Bond

    1.2860
    +0.0210 (+1.66%)
     
  • GBP/USD

    1.3754
    -0.0013 (-0.10%)
     
  • USD/JPY

    110.5100
    +0.3950 (+0.36%)
     
  • BTC-USD

    33,775.53
    +1,154.58 (+3.54%)
     
  • CMC Crypto 200

    786.33
    -7.40 (-0.93%)
     
  • FTSE 100

    7,027.58
    +59.28 (+0.85%)
     
  • Nikkei 225

    27,548.00
    +159.80 (+0.58%)
     

Don't Race Out To Buy Moelis & Company (NYSE:MC) Just Because It's Going Ex-Dividend

  • Oops!
    Something went wrong.
    Please try again later.
·3 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Moelis & Company (NYSE:MC) is about to trade ex-dividend in the next two days. This means that investors who purchase shares on or after the 5th of November will not receive the dividend, which will be paid on the 30th of November.

Moelis's next dividend payment will be US$0.38 per share. Last year, in total, the company distributed US$2.28 to shareholders. Looking at the last 12 months of distributions, Moelis has a trailing yield of approximately 6.1% on its current stock price of $37.2. 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! That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

Check out our latest analysis for Moelis

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Last year Moelis paid out 105% of its profits as dividends to shareholders, suggesting the dividend is not well covered by earnings.

Generally, the higher a company's payout ratio, the more the dividend is at risk of being reduced.

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 strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. This is why it's a relief to see Moelis earnings per share are up 4.4% per annum over the last five years.

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, six years ago, Moelis has lifted its dividend by approximately 19% a year on average. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

Final Takeaway

Is Moelis an attractive dividend stock, or better left on the shelf? While we like that its earnings are growing somewhat, we're not enamored that it's paying out 105% of last year's earnings. All things considered, we're not optimistic about its dividend prospects, and would be inclined to leave it on the shelf for now.

Having said that, if you're looking at this stock without much concern for the dividend, you should still be familiar of the risks involved with Moelis. We've identified 4 warning signs with Moelis (at least 1 which is significant), and understanding these should be part of your investment process.

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@simplywallst.com.