Yahoo Finance DICK'S Sporting Goods, Inc. (NYSE:DKS) Stock Goes Ex-Dividend In Just 3 Days
It looks like DICK'S Sporting Goods, Inc. (NYSE:DKS) is about to go ex-dividend in the next 3 days. Investors can purchase shares before the 19th of March in order to be eligible for this dividend, which will be paid on the 27th of March.
DICK'S Sporting Goods's next dividend payment will be US$0.31 per share. Last year, in total, the company distributed US$1.25 to shareholders. Calculating the last year's worth of payments shows that DICK'S Sporting Goods has a trailing yield of 4.6% on the current share price of $26.92. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to check whether the dividend payments are covered, and if earnings are growing.
Check out our latest analysis for DICK'S Sporting Goods
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. Fortunately DICK'S Sporting Goods's payout ratio is modest, at just 33% of profit. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Dividends consumed 53% of the company's free cash flow last year, which is within a normal range for most dividend-paying organisations.
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?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. This is why it's a relief to see DICK'S Sporting Goods earnings per share are up 3.3% per annum over the last five years. Earnings growth has been slim and the company is paying out more than half of its earnings. While there is some room to both increase the payout ratio and reinvest in the business, generally the higher a payout ratio goes, the lower a company's prospects for future growth.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, nine years ago, DICK'S Sporting Goods has lifted its dividend by approximately 11% a year on average. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.
Final Takeaway
Is DICK'S Sporting Goods worth buying for its dividend? Earnings per share have been growing at a steady rate, and DICK'S Sporting Goods paid out less than half its profits and more than half its free cash flow as dividends over the last year. All things considered, we are not particularly enthused about DICK'S Sporting Goods from a dividend perspective.
In light of that, while DICK'S Sporting Goods has an appealing dividend, it's worth knowing the risks involved with this stock. Our analysis shows 2 warning signs for DICK'S Sporting Goods and you should be aware of these before buying any shares.
If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
