It Might Not Be A Great Idea To Buy Adams Diversified Equity Fund, Inc. (NYSE:ADX) For Its Next Dividend
Readers hoping to buy Adams Diversified Equity Fund, Inc. (NYSE:ADX) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Thus, you can purchase Adams Diversified Equity Fund's shares before the 17th of May in order to receive the dividend, which the company will pay on the 1st of June.
The company's next dividend payment will be US$0.05 per share, on the back of last year when the company paid a total of US$1.07 to shareholders. Last year's total dividend payments show that Adams Diversified Equity Fund has a trailing yield of 6.9% on the current share price of $15.58. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
Check out our latest analysis for Adams Diversified Equity Fund
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. Adams Diversified Equity Fund lost money last year, so the fact that it's paying a dividend is certainly disconcerting. There might be a good reason for this, but we'd want to look into it further before getting comfortable.
Click here to see how much of its profit Adams Diversified Equity Fund paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Companies with falling earnings are riskier for dividend shareholders. If earnings fall far enough, the company could be forced to cut its dividend. Adams Diversified Equity Fund 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.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Since the start of our data, 10 years ago, Adams Diversified Equity Fund has lifted its dividend by approximately 4.8% a year on average.
Remember, you can always get a snapshot of Adams Diversified Equity Fund's financial health, by checking our visualisation of its financial health, here.
Final Takeaway
Is Adams Diversified Equity Fund worth buying for its dividend? It's hard to get past the idea of Adams Diversified Equity Fund paying a dividend despite reporting a loss over the past year - especially when the general trend in its earnings also looks to be negative. All things considered, we're not optimistic about its dividend prospects, and would be inclined to leave it on the shelf for now.
With that in mind though, if the poor dividend characteristics of Adams Diversified Equity Fund don't faze you, it's worth being mindful of the risks involved with this business. Be aware that Adams Diversified Equity Fund is showing 3 warning signs in our investment analysis, and 1 of those is concerning...
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.
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