Yahoo Finance Be Sure To Check Out Employers Holdings, Inc. (NYSE:EIG) Before It Goes Ex-Dividend
It looks like Employers Holdings, Inc. (NYSE:EIG) is about to go ex-dividend in the next 4 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 important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Accordingly, Employers Holdings investors that purchase the stock on or after the 10th of May will not receive the dividend, which will be paid on the 25th of May.
The company's next dividend payment will be US$0.26 per share, and in the last 12 months, the company paid a total of US$1.04 per share. Calculating the last year's worth of payments shows that Employers Holdings has a trailing yield of 2.6% on the current share price of $39.62. 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 Employers Holdings can afford its dividend, and if the dividend could grow.
See our latest analysis for Employers Holdings
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. That's why it's good to see Employers Holdings paying out a modest 30% of its earnings.
Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. If earnings fall far enough, the company could be forced to cut its dividend. With that in mind, we're not enthused to see that Employers Holdings's earnings per share have remained effectively flat over the past five years. It's better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last 10 years, Employers Holdings has lifted its dividend by approximately 16% a year on average.
The Bottom Line
Is Employers Holdings an attractive dividend stock, or better left on the shelf? Earnings per share have been flat in recent years, although Employers Holdings reinvests more than half its earnings in the business, which could suggest there are some growth projects that have not yet reached fruition. Overall, Employers Holdings looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
So while Employers Holdings looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. Be aware that Employers Holdings is showing 2 warning signs in our investment analysis, and 1 of those doesn't sit too well with us...
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.
