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It Might Not Be A Great Idea To Buy AXIS Capital Holdings Limited (NYSE:AXS) For Its Next Dividend

Simply Wall St
·3 min read

AXIS Capital Holdings Limited (NYSE:AXS) is about to trade ex-dividend in the next three days. If you purchase the stock on or after the 30th of December, you won't be eligible to receive this dividend, when it is paid on the 15th of January.

AXIS Capital Holdings's next dividend payment will be US$0.42 per share, and in the last 12 months, the company paid a total of US$1.64 per share. Based on the last year's worth of payments, AXIS Capital Holdings has a trailing yield of 3.3% on the current stock price of $50.36. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

See our latest analysis for AXIS Capital Holdings

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. AXIS Capital Holdings's dividend is not well covered by earnings, as the company lost money last year. This is not a sustainable state of affairs, so it would be worth investigating if earnings are expected to recover.

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?

Businesses with shrinking earnings are tricky from a dividend perspective. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. AXIS Capital Holdings reported a loss last year, and the general trend suggests its earnings have also been declining in recent years, making us wonder if the dividend is at risk.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. AXIS Capital Holdings has delivered an average of 7.2% per year annual increase in its dividend, based on the past 10 years of dividend payments.

Get our latest analysis on AXIS Capital Holdings's balance sheet health here.

To Sum It Up

Is AXIS Capital Holdings worth buying for its dividend? It's definitely not great to see that it paid a dividend despite reporting a loss last year. Worse, the general trend in its earnings looks negative in recent times. These characteristics don't generally lead to outstanding dividend performance, and investors may not be happy with the results of owning this stock for its dividend.

Having said that, if you're looking at this stock without much concern for the dividend, you should still be familiar of the risks involved with AXIS Capital Holdings. Our analysis shows 1 warning sign for AXIS Capital Holdings and you should be aware of this before buying any shares.

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.

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. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.