Why It Might Not Make Sense To Buy P10, Inc. (NYSE:PX) For Its Upcoming Dividend
Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see P10, Inc. (NYSE:PX) is about to trade ex-dividend in the next 4 days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. This means that investors who purchase P10's shares on or after the 29th of November will not receive the dividend, which will be paid on the 20th of December.
The company's next dividend payment will be US$0.033 per share. Last year, in total, the company distributed US$0.13 to shareholders. Calculating the last year's worth of payments shows that P10 has a trailing yield of 1.3% on the current share price of $9.69. If you buy this business for its dividend, you should have an idea of whether P10's dividend is reliable and sustainable. So we need to investigate whether P10 can afford its dividend, and if the dividend could grow.
See our latest analysis for P10
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. P10's dividend is not well covered by earnings, as the company lost money last year. This is not a sustainable state of affairs, so it would be worth investigating if earnings are expected to recover.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If earnings fall far enough, the company could be forced to cut its dividend. P10 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.
Given that P10 has only been paying a dividend for a year, there's not much of a past history to draw insight from.
We update our analysis on P10 every 24 hours, so you can always get the latest insights on its financial health, here.
The Bottom Line
From a dividend perspective, should investors buy or avoid P10? We're a bit uncomfortable with it paying a dividend while being loss-making. All things considered, we're not optimistic about its dividend prospects, and would be inclined to leave it on the shelf for now.
With that in mind though, if the poor dividend characteristics of P10 don't faze you, it's worth being mindful of the risks involved with this business. For example - P10 has 1 warning sign we think you should be aware of.
Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
