Should Income Investors Look At eXp World Holdings, Inc. (NASDAQ:EXPI) Before Its Ex-Dividend?
eXp World Holdings, Inc. ( NASDAQ:EXPI ) stock is about to trade ex-dividend in four 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. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. In other words, investors can purchase eXp World Holdings' shares before the 17th of August in order to be eligible for the dividend, which will be paid on the 4th of September.
The company's next dividend payment will be US$0.05 per share, and in the last 12 months, the company paid a total of US$0.185 per share. Looking at the last 12 months of distributions, eXp World Holdings has a trailing yield of approximately 0.9% on its current stock price of $22.85. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether eXp World Holdings can afford its dividend, and if the dividend could grow.
View our latest analysis for eXp World Holdings
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. An unusually high payout ratio of 340% of its profit suggests something is happening other than the usual distribution of profits to shareholders. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Luckily it paid out just 14% of its free cash flow last year.
It's good to see that while eXp World Holdings's dividends were not covered by profits, at least they are affordable from a cash perspective. If executives were to continue paying more in dividends than the company reported in profits, we'd view this as a warning sign. Extraordinarily few companies are capable of persistently paying a dividend that is greater than their profits.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That's why it's comforting to see eXp World Holdings's earnings have been skyrocketing, up 51% per annum for the past five years.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. eXp World Holdings has delivered an average of 12% per year annual increase in its dividend, based on the past two years of dividend payments. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.
To Sum It Up
Is eXp World Holdings worth buying for its dividend? It's good to see earnings per share growing and low cashflow payout ratio, although we're uncomfortable with eXp World Holdings's paying out such a high percentage of its profit. All things considered, we are not particularly enthused about eXp World Holdings from a dividend perspective.
So while eXp World Holdings looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. Every company has risks, and we've spotted 3 warning signs for eXp World Holdings you should know about.
If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.
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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.
