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There's A Lot To Like About Brown & Brown's (NYSE:BRO) Upcoming US$0.092 Dividend

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Simply Wall St
·3 min read
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Brown & Brown, Inc. (NYSE:BRO) stock is about to trade ex-dividend in 4 days. You will need to purchase shares before the 4th of February to receive the dividend, which will be paid on the 17th of February.

Brown & Brown's next dividend payment will be US$0.092 per share. Last year, in total, the company distributed US$0.37 to shareholders. Based on the last year's worth of payments, Brown & Brown stock has a trailing yield of around 0.9% on the current share price of $43.09. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to check whether the dividend payments are covered, and if earnings are growing.

See our latest analysis for Brown & Brown

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Brown & Brown has a low and conservative payout ratio of just 20% of its income after tax.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

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?

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 decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Fortunately for readers, Brown & Brown's earnings per share have been growing at 15% a year for the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last 10 years, Brown & Brown has lifted its dividend by approximately 9.1% 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.

Final Takeaway

Is Brown & Brown worth buying for its dividend? Companies like Brown & Brown that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. This strategy can add significant value to shareholders over the long term - as long as it's done without issuing too many new shares. In summary, Brown & Brown appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

In light of that, while Brown & Brown has an appealing dividend, it's worth knowing the risks involved with this stock. Our analysis shows 1 warning sign for Brown & Brown 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.