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We Wouldn't Be Too Quick To Buy WisdomTree Investments, Inc. (NASDAQ:WETF) Before It Goes Ex-Dividend

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Simply Wall St
·3 min read
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WisdomTree Investments, Inc. (NASDAQ:WETF) stock is about to trade ex-dividend in four days. Ex-dividend means that investors that purchase the stock on or after the 9th of February will not receive this dividend, which will be paid on the 24th of February.

WisdomTree Investments's next dividend payment will be US$0.03 per share, on the back of last year when the company paid a total of US$0.12 to shareholders. Looking at the last 12 months of distributions, WisdomTree Investments has a trailing yield of approximately 2.2% on its current stock price of $5.51. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether WisdomTree Investments has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for WisdomTree Investments

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. WisdomTree Investments paid a dividend last year despite being unprofitable. This might be a one-off event, but it's not a sustainable state of affairs in the long run.

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?

When earnings decline, dividend companies become much harder to analyse and own safely. If earnings fall far enough, the company could be forced to cut its dividend. WisdomTree Investments was unprofitable last year 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.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. WisdomTree Investments has seen its dividend decline 15% per annum on average over the past six years, which is not great to see. While it's not great that earnings and dividends per share have fallen in recent years, we're encouraged by the fact that management has trimmed the dividend rather than risk over-committing the company in a risky attempt to maintain yields to shareholders.

Remember, you can always get a snapshot of WisdomTree Investments's financial health, by checking our visualisation of its financial health, here.

To Sum It Up

From a dividend perspective, should investors buy or avoid WisdomTree Investments? It's definitely not great to see that it paid a dividend despite reporting a loss last year. Worse, the general trend in its earnings looks negative in recent times. This is not an overtly appealing combination of characteristics, and we're just not that interested in this company's dividend.

So if you're still interested in WisdomTree Investments despite it's poor dividend qualities, you should be well informed on some of the risks facing this stock. For example, WisdomTree Investments has 3 warning signs (and 1 which is potentially serious) we think you should know about.

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.