U.S. markets open in 1 hour 52 minutes
  • S&P Futures

    3,284.75
    +9.75 (+0.30%)
     
  • Dow Futures

    27,083.00
    +28.00 (+0.10%)
     
  • Nasdaq Futures

    11,063.00
    +74.00 (+0.67%)
     
  • Russell 2000 Futures

    1,485.60
    +2.80 (+0.19%)
     
  • Crude Oil

    39.60
    +0.29 (+0.74%)
     
  • Gold

    1,911.50
    +0.90 (+0.05%)
     
  • Silver

    24.46
    +0.07 (+0.30%)
     
  • EUR/USD

    1.1762
    -0.0011 (-0.09%)
     
  • 10-Yr Bond

    0.6710
    0.0000 (0.00%)
     
  • Vix

    27.69
    +1.86 (+7.20%)
     
  • GBP/USD

    1.2842
    +0.0025 (+0.20%)
     
  • USD/JPY

    104.5200
    -0.1600 (-0.15%)
     
  • BTC-USD

    10,498.14
    +60.42 (+0.58%)
     
  • CMC Crypto 200

    222.52
    -13.07 (-5.55%)
     
  • FTSE 100

    5,829.57
    +25.28 (+0.44%)
     
  • Nikkei 225

    23,360.30
    +40.90 (+0.18%)
     

The National Security Group, Inc. (NASDAQ:NSEC) Is About To Go Ex-Dividend, And It Pays A 1.6% Yield

Simply Wall St

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see The National Security Group, Inc. (NASDAQ:NSEC) is about to trade ex-dividend in the next 3 days. If you purchase the stock on or after the 31st of January, you won't be eligible to receive this dividend, when it is paid on the 28th of February.

National Security Group's next dividend payment will be US$0.06 per share, on the back of last year when the company paid a total of US$0.24 to shareholders. Based on the last year's worth of payments, National Security Group has a trailing yield of 1.6% on the current stock price of $14.7. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether National Security Group has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for National Security Group

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. National Security Group paid out a comfortable 41% of its profit last year.

Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.

Click here to see how much of its profit National Security Group paid out over the last 12 months.

NasdaqGM:NSEC Historical Dividend Yield, January 27th 2020
NasdaqGM:NSEC Historical Dividend Yield, January 27th 2020

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. With that in mind, we're discomforted by National Security Group's 27% per annum decline in earnings in the past five years. Such a sharp decline casts doubt on the future sustainability of the dividend.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. National Security Group has seen its dividend decline 8.8% per annum on average over the past ten years, which is not great to see. It's never nice to see earnings and dividends falling, but at least management has cut the dividend rather than potentially risk the company's health in an attempt to maintain it.

Final Takeaway

Is National Security Group worth buying for its dividend? National Security Group's earnings per share are down over the past five years, although it has the cushion of a low payout ratio, which would suggest a cut to the dividend is relatively unlikely. We think there are likely better opportunities out there.

Want to learn more about National Security Group? Here's a visualisation of its historical rate of revenue and earnings growth.

If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.