Yahoo Finance Bristol-Myers Squibb Company (NYSE:BMY) Looks Like A Good Stock, And It's Going Ex-Dividend Soon
It looks like Bristol-Myers Squibb Company (NYSE:BMY) is about to go ex-dividend in the next four days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. This means that investors who purchase Bristol-Myers Squibb's shares on or after the 6th of July will not receive the dividend, which will be paid on the 1st of August.
The company's next dividend payment will be US$0.57 per share. Last year, in total, the company distributed US$2.28 to shareholders. Based on the last year's worth of payments, Bristol-Myers Squibb has a trailing yield of 3.6% on the current stock price of $63.95. 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 investigate whether Bristol-Myers Squibb can afford its dividend, and if the dividend could grow.
View our latest analysis for Bristol-Myers Squibb
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. Bristol-Myers Squibb paid out 64% of its earnings to investors last year, a normal payout level for most businesses. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Fortunately, it paid out only 43% of its free cash flow in the past year.
It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings fall far enough, the company could be forced to cut its dividend. That's why it's comforting to see Bristol-Myers Squibb's earnings have been skyrocketing, up 42% per annum for the past five years. Management appears to be striking a nice balance between reinvesting for growth and paying dividends to shareholders. Earnings per share have been growing quickly and in combination with some reinvestment and a middling payout ratio, the stock may have decent dividend prospects going forwards.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Bristol-Myers Squibb has delivered an average of 5.3% per year annual increase in its dividend, based on the past 10 years of dividend payments. Earnings per share have been growing much quicker than dividends, potentially because Bristol-Myers Squibb is keeping back more of its profits to grow the business.
To Sum It Up
Has Bristol-Myers Squibb got what it takes to maintain its dividend payments? We like Bristol-Myers Squibb's growing earnings per share and the fact that - while its payout ratio is around average - it paid out a lower percentage of its cash flow. There's a lot to like about Bristol-Myers Squibb, and we would prioritise taking a closer look at it.
On that note, you'll want to research what risks Bristol-Myers Squibb is facing. Every company has risks, and we've spotted 2 warning signs for Bristol-Myers Squibb you should know about.
A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.
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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.
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