Interested In United Fire Group's (NASDAQ:UFCS) Upcoming US$0.16 Dividend? You Have Four Days Left
It looks like United Fire Group, Inc. (NASDAQ:UFCS) is about to go ex-dividend in the next four days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. This means that investors who purchase United Fire Group's shares on or after the 7th of March will not receive the dividend, which will be paid on the 22nd of March.
The company's next dividend payment will be US$0.16 per share. Last year, in total, the company distributed US$0.64 to shareholders. Based on the last year's worth of payments, United Fire Group stock has a trailing yield of around 2.8% on the current share price of US$23.01. If you buy this business for its dividend, you should have an idea of whether United Fire Group'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.
See our latest analysis for United Fire Group
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. United Fire Group reported a loss after tax last year, which means it's paying a dividend despite being unprofitable. While this might be a one-off event, this is unlikely to be sustainable in the long term.
Click here to see how much of its profit United Fire Group paid out over the last 12 months.
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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. United Fire Group reported a loss last year, but at least the general trend suggests its income has 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.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. United Fire Group has seen its dividend decline 1.2% per annum on average over the past 10 years, which is not great to see.
Get our latest analysis on United Fire Group's balance sheet health here.
To Sum It Up
From a dividend perspective, should investors buy or avoid United Fire Group? It's not great to see the company paying a dividend despite being loss-making over the last year. This is not an overtly appealing combination of characteristics, and we're just not that interested in this company's dividend.
So if you're still interested in United Fire Group despite it's poor dividend qualities, you should be well informed on some of the risks facing this stock. Our analysis shows 1 warning sign for United Fire Group and you should be aware of it before buying any shares.
A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
