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We Wouldn't Be Too Quick To Buy Cowen Inc. (NASDAQ:COWN) Before It Goes Ex-Dividend

Simply Wall St

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Cowen Inc. ( NASDAQ:COWN ) is about to go ex-dividend in just 3 days. You will need to purchase shares before the 29th of May to receive the dividend, which will be paid on the 15th of June.

Cowen's next dividend payment will be US$0.04 per share, on the back of last 12 months when the company paid a total of US$0.04 to shareholders. 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.

(Note: The total dividend amount paid in the last 12 months has been corrected to US$0.04. The original article incorrectly stated the figure was US$0.16.)

See our latest analysis for Cowen

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Cowen's dividend is not well covered by earnings, as the company lost money over the last 12 month period. 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.

NasdaqGS:COWN Historical Dividend Yield May 25th 2020

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Cowen was unprofitable during the last 12 months and, unfortunately, the general trend suggests its earnings have been in decline over the last five years, making us wonder if the dividend is sustainable at all.

This is Cowen's first year of paying a dividend, which is exciting for shareholders - but it does mean there's no dividend history to examine.

Get our latest analysis on Cowen's balance sheet health here.

To Sum It Up

Is Cowen an attractive dividend stock, or better left on the shelf? First, it's not great to see the company paying a dividend despite being loss-making over the last year. Worse, the general trend in its earnings looks negative in recent years. These characteristics don't generally lead to outstanding dividend performance, and investors may not be happy with the results of owning this stock for its dividend.

Although, if you're still interested in Cowen and want to know more, you'll find it very useful to know what risks this stock faces. We've identified 3 warning signs with Cowen (at least 2 which are significant) , and understanding them should be part of your investment process.

If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.

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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. Thank you for reading.