Readers hoping to buy Star Bulk Carriers Corp. (NASDAQ:SBLK) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. You will need to purchase shares before the 29th of November to receive the dividend, which will be paid on the 16th of December.
Star Bulk Carriers's next dividend payment will be US$0.05 per share, and in the last 12 months, the company paid a total of US$0.20 per share. Last year's total dividend payments show that Star Bulk Carriers has a trailing yield of 1.9% on the current share price of $10.63. 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.
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. Star Bulk Carriers paid a dividend despite reporting negative free cash flow over the last twelve months. This may be due to heavy investment in the business, but this is still suboptimal from a dividend sustainability perspective.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. Star Bulk Carriers was unprofitable last year, but at least the general trend suggests its earnings have 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.
This is Star Bulk Carriers's first year of paying a dividend, so it doesn't have much of a history yet to compare to.
Remember, you can always get a snapshot of Star Bulk Carriers's financial health, by checking our visualisation of its financial health, here.
Is Star Bulk Carriers an attractive dividend stock, or better left on the shelf? Overall, Star Bulk Carriers looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
Curious what other investors think of Star Bulk Carriers? See what analysts are forecasting, with this visualisation of its historical and future estimated earnings and cash flow.
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.
If you spot an error that warrants correction, please contact the editor at email@example.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.
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