Beazley plc (LON:BEZ) stock is about to trade ex-dividend in 4 days time. You will need to purchase shares before the 1st of August to receive the dividend, which will be paid on the 29th of August.
Beazley's next dividend payment will be US$0.041 per share, on the back of last year when the company paid a total of US$0.14 to shareholders. Last year's total dividend payments show that Beazley has a trailing yield of 2.1% on the current share price of £5.65. 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! That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
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. Beazley paid out a comfortable 49% of its profit last year.
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?
Companies with falling earnings are riskier for dividend shareholders. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Beazley's earnings per share have fallen at approximately 10% a year over the previous 5 years. Such a sharp decline casts doubt on the future sustainability of the dividend.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last 10 years, Beazley has lifted its dividend by approximately 4.8% a year on average.
Should investors buy Beazley for the upcoming dividend? Beazley's earnings per share are down over the past 5 years, although it has the cushion of a low payout ratio, which would suggest a cut to the dividend is relatively unlikely. In sum this is a middling combination, and we find it hard to get excited about the company from a dividend perspective.
Curious what other investors think of Beazley? See what analysts are forecasting, with this visualisation of its historical and future estimated earnings and cash flow .
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.
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