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Readers hoping to buy CURO Group Holdings Corp. (NYSE:CURO) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. You will need to purchase shares before the 12th of August to receive the dividend, which will be paid on the 24th of August.
CURO Group Holdings's next dividend payment will be US$0.055 per share, and in the last 12 months, the company paid a total of US$0.22 per share. Based on the last year's worth of payments, CURO Group Holdings has a trailing yield of 2.9% on the current stock price of $7.59. If you buy this business for its dividend, you should have an idea of whether CURO Group Holdings's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
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. CURO Group Holdings has a low and conservative payout ratio of just 2.0% of its income after tax.
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.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings fall far enough, the company could be forced to cut its dividend. That's why it's comforting to see CURO Group Holdings's earnings have been skyrocketing, up 42% per annum for the past five years.
Unfortunately CURO Group Holdings has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.
The Bottom Line
From a dividend perspective, should investors buy or avoid CURO Group Holdings? When companies are growing rapidly and retaining a majority of the profits within the business, it's usually a sign that reinvesting earnings creates more value than paying dividends to shareholders. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. Overall, CURO Group Holdings looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
While it's tempting to invest in CURO Group Holdings for the dividends alone, you should always be mindful of the risks involved. For example, we've found 3 warning signs for CURO Group Holdings that we recommend you consider before investing in the business.
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.
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