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Korn Ferry (NYSE:KFY) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

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Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Korn Ferry (NYSE:KFY) is about to trade ex-dividend in the next four days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Thus, you can purchase Korn Ferry's shares before the 5th of July in order to receive the dividend, which the company will pay on the 29th of July.

The company's next dividend payment will be US$0.15 per share. Last year, in total, the company distributed US$0.48 to shareholders. Based on the last year's worth of payments, Korn Ferry has a trailing yield of 1.0% on the current stock price of $57.74. If you buy this business for its dividend, you should have an idea of whether Korn Ferry'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 Korn Ferry

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. Korn Ferry is paying out just 8.6% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

historic-dividend
historic-dividend

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. It's encouraging to see Korn Ferry has grown its earnings rapidly, up 30% a year for the past five years. Korn Ferry earnings per share have been sprinting ahead like the Road Runner at a track and field day; scarcely stopping even for a cheeky "beep-beep". We also like that it is reinvesting most of its profits in its business.'

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past eight years, Korn Ferry has increased its dividend at approximately 5.2% a year on average. Earnings per share have been growing much quicker than dividends, potentially because Korn Ferry is keeping back more of its profits to grow the business.

To Sum It Up

Should investors buy Korn Ferry for the upcoming dividend? Companies like Korn Ferry that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. We think this is a pretty attractive combination, and would be interested in investigating Korn Ferry more closely.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. Our analysis shows 1 warning sign for Korn Ferry and you should be aware of this before buying any shares.

If you're in the market for strong dividend payers, we recommend checking our selection of top 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.