Four Days Left Until Bel Fuse Inc. (NASDAQ:BELF.B) Trades Ex-Dividend
Bel Fuse Inc. (NASDAQ:BELF.B) stock is about to trade ex-dividend in four days. You can purchase shares before the 14th of October in order to receive the dividend, which the company will pay on the 30th of October.
Bel Fuse's upcoming dividend is US$0.07 a share, following on from the last 12 months, when the company distributed a total of US$0.28 per share to shareholders. Calculating the last year's worth of payments shows that Bel Fuse has a trailing yield of 2.6% on the current share price of $10.89. 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! As a result, readers should always check whether Bel Fuse has been able to grow its dividends, or if the dividend might be cut.
Check out our latest analysis for Bel Fuse
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. Bel Fuse reported a loss last year, so it's not great to see that it has continued paying a dividend. Considering the lack of profitability, we also need to check if the company generated enough cash flow to cover the dividend payment. If cash earnings don't cover the dividend, the company would have to pay dividends out of cash in the bank, or by borrowing money, neither of which is long-term sustainable. The good news is it paid out just 13% of its free cash flow in the last year.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Bel Fuse was unprofitable last year, but at least the general trend suggests its earnings have been improving over the past five years. Even so, an unprofitable company whose business does not quickly recover is usually not a good candidate for dividend investors.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Bel Fuse's dividend payments are broadly unchanged compared to where they were 10 years ago.
We update our analysis on Bel Fuse every 24 hours, so you can always get the latest insights on its financial health, here.
To Sum It Up
Has Bel Fuse got what it takes to maintain its dividend payments? It's hard to get used to Bel Fuse paying a dividend despite reporting a loss over the past year. At least the dividend was covered by free cash flow, however. While it does have some good things going for it, we're a bit ambivalent and it would take more to convince us of Bel Fuse's dividend merits.
In light of that, while Bel Fuse has an appealing dividend, it's worth knowing the risks involved with this stock. Our analysis shows 2 warning signs for Bel Fuse and you should be aware of these before buying any shares.
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.
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