Walker & Dunlop, Inc. (NYSE:WD) Passed Our Checks, And It's About To Pay A US$0.50 Dividend
Readers hoping to buy Walker & Dunlop, Inc. (NYSE:WD) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. Investors can purchase shares before the 19th of February in order to be eligible for this dividend, which will be paid on the 11th of March.
Walker & Dunlop's next dividend payment will be US$0.50 per share, and in the last 12 months, the company paid a total of US$2.00 per share. Based on the last year's worth of payments, Walker & Dunlop stock has a trailing yield of around 2.0% on the current share price of $100.36. 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 Walker & Dunlop
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. Walker & Dunlop has a low and conservative payout ratio of just 18% of its income after tax. Walker & Dunlop paid a dividend despite reporting negative free cash flow last year. That's typically a bad combination and - if this were more than a one-off - not sustainable.
When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings fall far enough, the company could be forced to cut its dividend. That's why it's comforting to see Walker & Dunlop's earnings have been skyrocketing, up 24% per annum for the past five years.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, three years ago, Walker & Dunlop has lifted its dividend by approximately 26% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.
To Sum It Up
Should investors buy Walker & Dunlop for the upcoming dividend? Companies like Walker & Dunlop that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. Overall, Walker & Dunlop looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
While it's tempting to invest in Walker & Dunlop for the dividends alone, you should always be mindful of the risks involved. Case in point: We've spotted 3 warning signs for Walker & Dunlop you should be aware of.
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.
