Yahoo Finance Don't Buy Atlantic American Corporation (NASDAQ:AAME) For Its Next Dividend Without Doing These Checks
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 Atlantic American Corporation (NASDAQ:AAME) is about to go ex-dividend in just three days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Accordingly, Atlantic American investors that purchase the stock on or after the 11th of April will not receive the dividend, which will be paid on the 26th of April.
The company's upcoming dividend is US$0.02 a share, following on from the last 12 months, when the company distributed a total of US$0.02 per share to shareholders. Calculating the last year's worth of payments shows that Atlantic American has a trailing yield of 0.9% on the current share price of US$2.19. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to check whether the dividend payments are covered, and if earnings are growing.
View our latest analysis for Atlantic American
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Atlantic American reported a loss last year, so it's not great to see that it has continued paying a dividend.
Click here to see how much of its profit Atlantic American paid out over the last 12 months.
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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Atlantic American reported a loss last year, but at least the general trend suggests its income has 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.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. It looks like the Atlantic American dividends are largely the same as they were 10 years ago.
Remember, you can always get a snapshot of Atlantic American's financial health, by checking our visualisation of its financial health, here.
To Sum It Up
Should investors buy Atlantic American for the upcoming dividend? 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 being said, if you're still considering Atlantic American as an investment, you'll find it beneficial to know what risks this stock is facing. To help with this, we've discovered 1 warning sign for Atlantic American that you should be aware of before investing in their shares.
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.
