Diamond Hill Investment Group, Inc. (NASDAQ:DHIL) is about to trade ex-dividend in the next 4 days. You will need to purchase shares before the 29th of November to receive the dividend, which will be paid on the 10th of December.
Diamond Hill Investment Group's next dividend payment will be US$9.00 per share, and in the last 12 months, the company paid a total of US$9.00 per share. Based on the last year's worth of payments, Diamond Hill Investment Group has a trailing yield of 6.2% on the current stock price of $145.3. 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 Diamond Hill Investment Group can afford its dividend, and if the dividend could grow.
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut.
When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.
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 fall far enough, the company could be forced to cut its dividend. Fortunately for readers, Diamond Hill Investment Group's earnings per share have been growing at 14% a year for the past five years.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Diamond Hill Investment Group has seen its dividend decline 1.0% per annum on average over the past ten years, which is not great to see.
To Sum It Up
Has Diamond Hill Investment Group got what it takes to maintain its dividend payments? 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 strategy can add significant value to shareholders over the long term - as long as it's done without issuing too many new shares. We think this is a pretty attractive combination, and would be interested in investigating Diamond Hill Investment Group more closely.
Curious about whether Diamond Hill Investment Group has been able to consistently generate growth? Here's a chart of its historical revenue and earnings growth.
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.
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