Four Days Left To Buy Universal Insurance Holdings, Inc. (NYSE:UVE) Before The Ex-Dividend Date
Universal Insurance Holdings, Inc. (NYSE:UVE) is about to trade ex-dividend in the next 4 days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Therefore, if you purchase Universal Insurance Holdings' shares on or after the 9th of March, you won't be eligible to receive the dividend, when it is paid on the 17th of March.
The company's next dividend payment will be US$0.16 per share. Last year, in total, the company distributed US$0.77 to shareholders. Based on the last year's worth of payments, Universal Insurance Holdings has a trailing yield of 6.3% on the current stock price of $12.22. 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 check whether the dividend payments are covered, and if earnings are growing.
Check out our latest analysis for Universal Insurance Holdings
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. That's why it's good to see Universal Insurance Holdings paying out a modest 39% of its earnings.
Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.
Click here to see how much of its profit Universal Insurance Holdings paid out over the last 12 months.
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. Readers will understand then, why we're concerned to see Universal Insurance Holdings's earnings per share have dropped 11% a year over the past five years. Ultimately, when earnings per share decline, the size of the pie from which dividends can be paid, shrinks.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Universal Insurance Holdings has delivered an average of 9.2% per year annual increase in its dividend, based on the past 10 years of dividend payments.
Final Takeaway
Is Universal Insurance Holdings worth buying for its dividend? Universal Insurance Holdings's earnings per share are down over the past five years, although it has the cushion of a low payout ratio, which would suggest a cut to the dividend is relatively unlikely. It might be worth researching if the company is reinvesting in growth projects that could grow earnings and dividends in the future, but for now we're on the fence about its dividend prospects.
If you want to look further into Universal Insurance Holdings, it's worth knowing the risks this business faces. For example, we've found 2 warning signs for Universal Insurance Holdings that we recommend you consider before investing in the business.
Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
