U.S. markets closed
  • S&P 500

    4,185.47
    +15.05 (+0.36%)
     
  • Dow 30

    34,200.67
    +164.68 (+0.48%)
     
  • Nasdaq

    14,052.34
    +13.58 (+0.10%)
     
  • Russell 2000

    2,262.67
    +5.60 (+0.25%)
     
  • Crude Oil

    63.07
    -0.39 (-0.61%)
     
  • Gold

    1,777.30
    +10.50 (+0.59%)
     
  • Silver

    26.04
    +0.08 (+0.29%)
     
  • EUR/USD

    1.1980
    +0.0004 (+0.04%)
     
  • 10-Yr Bond

    1.5730
    +0.0430 (+2.81%)
     
  • GBP/USD

    1.3840
    +0.0056 (+0.41%)
     
  • USD/JPY

    108.7830
    +0.0670 (+0.06%)
     
  • BTC-USD

    61,014.59
    -955.38 (-1.54%)
     
  • CMC Crypto 200

    1,398.97
    +7.26 (+0.52%)
     
  • FTSE 100

    7,019.53
    +36.03 (+0.52%)
     
  • Nikkei 225

    29,683.37
    +40.68 (+0.14%)
     

Only Four Days Left To Cash In On Nine Entertainment Holdings' (ASX:NEC) Dividend

  • Oops!
    Something went wrong.
    Please try again later.
Simply Wall St
·4 min read
  • Oops!
    Something went wrong.
    Please try again later.

Nine Entertainment Co. Holdings Limited (ASX:NEC) stock is about to trade ex-dividend in 4 days. You can purchase shares before the 4th of March in order to receive the dividend, which the company will pay on the 20th of April.

Nine Entertainment Holdings's next dividend payment will be AU$0.05 per share, and in the last 12 months, the company paid a total of AU$0.07 per share. Based on the last year's worth of payments, Nine Entertainment Holdings stock has a trailing yield of around 2.4% on the current share price of A$2.87. 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! So we need to check whether the dividend payments are covered, and if earnings are growing.

View our latest analysis for Nine Entertainment Holdings

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. Nine Entertainment Holdings 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. Considering the lack of profitability, we also need to check if the company generated enough cash flow to cover the dividend payment. If Nine Entertainment Holdings didn't generate enough cash to pay the dividend, then it must have either paid from cash in the bank or by borrowing money, neither of which is sustainable in the long term. Fortunately, it paid out only 33% of its free cash flow in the past year.

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 strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings fall far enough, the company could be forced to cut its dividend. Nine Entertainment Holdings reported a loss last year, but at least the general trend suggests its income has been improving over the past five years. Even so, an unprofitable company whose business does not quickly recover is usually not a good candidate for dividend investors.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last seven years, Nine Entertainment Holdings has lifted its dividend by approximately 7.6% a year on average. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

We update our analysis on Nine Entertainment Holdings every 24 hours, so you can always get the latest insights on its financial health, here.

To Sum It Up

From a dividend perspective, should investors buy or avoid Nine Entertainment Holdings? First, it's not great to see the company paying a dividend despite being loss-making over the last year. On the plus side, the dividend was covered by free cash flow." All things considered, we are not particularly enthused about Nine Entertainment Holdings from a dividend perspective.

In light of that, while Nine Entertainment Holdings has an appealing dividend, it's worth knowing the risks involved with this stock. In terms of investment risks, we've identified 1 warning sign with Nine Entertainment Holdings and understanding them should be part of your investment process.

We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting 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.