Yahoo Finance Be Sure To Check Out Ethan Allen Interiors Inc. (NYSE:ETD) Before It Goes Ex-Dividend
It looks like Ethan Allen Interiors Inc. (NYSE:ETD) is about to go ex-dividend in the next three 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. Thus, you can purchase Ethan Allen Interiors' shares before the 6th of May in order to receive the dividend, which the company will pay on the 23rd of May.
The company's next dividend payment will be US$0.39 per share, on the back of last year when the company paid a total of US$2.06 to shareholders. Looking at the last 12 months of distributions, Ethan Allen Interiors has a trailing yield of approximately 7.2% on its current stock price of US$28.78. If you buy this business for its dividend, you should have an idea of whether Ethan Allen Interiors's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
See our latest analysis for Ethan Allen Interiors
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Ethan Allen Interiors paid out more than half (52%) of its earnings last year, which is a regular payout ratio for most companies. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. Over the last year it paid out 53% of its free cash flow as dividends, within the usual range for most companies.
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?
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. If earnings fall far enough, the company could be forced to cut its dividend. For this reason, we're glad to see Ethan Allen Interiors's earnings per share have risen 16% per annum over the last five years. Ethan Allen Interiors has an average payout ratio which suggests a balance between growing earnings and rewarding shareholders. This is a reasonable combination that could hint at some further dividend increases in the future.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Ethan Allen Interiors has delivered 18% dividend growth per year on average over the past 10 years. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.
To Sum It Up
Is Ethan Allen Interiors worth buying for its dividend? It's good to see earnings are growing, since all of the best dividend stocks grow their earnings meaningfully over the long run. However, we'd also note that Ethan Allen Interiors is paying out more than half of its earnings and cash flow as profits, which could limit the dividend growth if earnings growth slows. While it does have some good things going for it, we're a bit ambivalent and it would take more to convince us of Ethan Allen Interiors's dividend merits.
In light of that, while Ethan Allen Interiors has an appealing dividend, it's worth knowing the risks involved with this stock. For example, Ethan Allen Interiors has 2 warning signs (and 1 which is concerning) we think you should know about.
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.
