LeMaitre Vascular, Inc. (NASDAQ:LMAT) is about to trade ex-dividend in the next 2 days. You can purchase shares before the 20th of August in order to receive the dividend, which the company will pay on the 5th of September.
LeMaitre Vascular's next dividend payment will be US$0.085 per share, and in the last 12 months, the company paid a total of US$0.34 per share. Last year's total dividend payments show that LeMaitre Vascular has a trailing yield of 1.1% on the current share price of $31.52. 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! We need to see whether the dividend is covered by earnings and if it's growing.
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. Fortunately LeMaitre Vascular's payout ratio is modest, at just 33% of profit. A useful secondary check can be to evaluate whether LeMaitre Vascular generated enough free cash flow to afford its dividend. It paid out more than half (53%) of its free cash flow in the past year, which is within an average range for most companies.
It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That's why it's comforting to see LeMaitre Vascular's earnings have been skyrocketing, up 35% per annum for the past five years.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last 8 years, LeMaitre Vascular has lifted its dividend by approximately 20% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.
To Sum It Up
From a dividend perspective, should investors buy or avoid LeMaitre Vascular? Earnings per share have grown at a nice rate in recent times and over the last year, LeMaitre Vascular paid out less than half its earnings and a bit over half its free cash flow. There's a lot to like about LeMaitre Vascular, and we would prioritise taking a closer look at it.
Curious what other investors think of LeMaitre Vascular? See what analysts are forecasting, with this visualisation of its historical and future estimated earnings and cash flow .
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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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.