Regular readers will know that we love our dividends at Simply Wall St, which is why it’s exciting to see Stifel Financial Corp. (NYSE:SF) is about to trade ex-dividend in the next 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. 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. Accordingly, Stifel Financial investors that purchase the stock on or after the 30th of November will not receive the dividend, which will be paid on the 15th of December.
The company’s next dividend payment will be US$0.36 per share, on the back of last year when the company paid a total of US$1.44 to shareholders. Based on the last year’s worth of payments, Stifel Financial has a trailing yield of 2.3% on the current stock price of $62.14. If you buy this business for its dividend, you should have an idea of whether Stifel Financial’s dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it’s growing.
See our latest analysis for Stifel Financial
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. Stifel Financial paid out a comfortable 30% of its profit last year.
When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.
Click here to see the company’s payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. It’s encouraging to see Stifel Financial has grown its earnings rapidly, up 24% a year for the past five years.
Another key way to measure a company’s dividend prospects is by measuring its historical rate of dividend growth. In the last six years, Stifel Financial has lifted its dividend by approximately 32% a year on average. It’s great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.
Final Takeaway
Is Stifel Financial an attractive dividend stock, or better left on the shelf? Companies like Stifel Financial that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. We think this is a pretty attractive combination, and would be interested in investigating Stifel Financial more closely.
While it’s tempting to invest in Stifel Financial for the dividends alone, you should always be mindful of the risks involved. In terms of investment risks, we’ve identified 1 warning sign with Stifel Financial and understanding them should be part of your investment process.
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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