Yahoo Finance Eli Lilly and Company (NYSE:LLY) Looks Interesting, And It's About To Pay A Dividend
Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Eli Lilly and Company (NYSE:LLY) is about to trade ex-dividend in the next four days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. 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. Meaning, you will need to purchase Eli Lilly's shares before the 14th of February to receive the dividend, which will be paid on the 10th of March.
The company's upcoming dividend is US$1.13 a share, following on from the last 12 months, when the company distributed a total of US$4.52 per share to shareholders. Based on the last year's worth of payments, Eli Lilly stock has a trailing yield of around 1.3% on the current share price of $340.73. If you buy this business for its dividend, you should have an idea of whether Eli Lilly's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.
See our latest analysis for Eli Lilly
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Eli Lilly is paying out an acceptable 57% of its profit, a common payout level among most companies.
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. It's encouraging to see Eli Lilly has grown its earnings rapidly, up 31% a year for the past five years. Management appears to be striking a nice balance between reinvesting for growth and paying dividends to shareholders. With a reasonable payout ratio, profits being reinvested, and some earnings growth, Eli Lilly could have strong prospects for future increases to the dividend.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Eli Lilly has delivered 8.7% dividend growth per year on average over the past 10 years. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.
The Bottom Line
Has Eli Lilly got what it takes to maintain its dividend payments? Eli Lilly has an acceptable payout ratio and its earnings per share have been improving at a decent rate. Overall, Eli Lilly looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
In light of that, while Eli Lilly has an appealing dividend, it's worth knowing the risks involved with this stock. To help with this, we've discovered 2 warning signs for Eli Lilly that you should be aware of before investing in their shares.
A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here
