Some investors rely on dividends to grow their wealth, and if you’re one of those dividend detectives you might be interested DICK’S Sporting Goods, Inc. (NYSE: DKS) will go ex-dividend in just four days. The ex-dividend day is one day before the record date, the day on which shareholders must be on the company’s books to receive a dividend. The ex-dividend date is important because it takes at least two business days to settle any time you buy or sell a stock. So if you buy shares in DICK’S Sporting Goods on or after June 10th, you will not be entitled to the dividend if it is paid on June 25th.
The company’s next dividend payment is $ 0.36 per share. In the past year, the company paid out a total of $ 1.45 to shareholders. Based on last year’s payments, DICK’S Sporting Goods stock has a trailing yield of around 1.5% on the current share price of $ 97.47. We love when companies pay a dividend, but it’s also important that laying the golden eggs doesn’t kill our golden goose! So we need to investigate whether DICK’S Sporting Goods can afford its dividend and whether the dividend could go up.
Check out our latest analysis for DICK’S Sporting Goods
When a company pays more dividends than it deserves, the dividend can no longer be sustainable – hardly an ideal situation. DICK’S Sporting Goods has a low and conservative payout ratio of only 11% of its after-tax income. But cash flows are even more important than earnings in evaluating a dividend, so we need to see if the company has made enough money to pay its dividend. Thankfully, she only paid out 5.7% of her free cash flow last year.
It’s encouraging to see that the dividend is covered by both earnings and cash flow. This generally suggests that the dividend will be sustainable as long as earnings don’t plummet.
Click here to view the company’s payout ratio, as well as analyst estimates for its future dividends.
NYSE: DKS Historic Dividend June 5, 2021
Have profits and dividends grown?
Stocks of companies with sustained earnings growth often offer the best dividend prospects because as earnings increase, it is easier to increase the dividend. If earnings plummet and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Because of this, it’s comforting to see that DICK’S Sporting Goods revenues have skyrocketed 34% annually over the past five years. With earnings per share soaring and a sensible reinvestment of almost all of the company’s profits in the business, DICK’S Sporting Goods looks like a promising growth company.
Many investors will judge a company’s dividend performance by assessing how much dividend payments have changed over time. DICK’S Sporting Goods has averaged 11% dividend growth per year for the past 10 years. Both earnings per share and dividends have grown rapidly lately which is great to see.
Is DICK’S Sporting Goods an attractive dividend stock or is it better on the shelf? It’s great that DICK’S Sporting Goods is increasing earnings per share while distributing a small percentage of earnings and cash flow. It’s disappointing to see the dividend cut at least once in the past, but from today’s perspective, the low payout ratio suggests a conservative dividend approach that we like. There’s a lot to like about DICK’S Sporting Goods and we’d prefer to take a closer look at it.
So while DICK’S Sporting Goods looks good from a dividend standpoint, it’s always worth keeping up to date on the risks of this stock. For example, we identified 4 warning signs for DICK’S Sporting Goods (1 is potentially serious) you should be aware.
If you are in the dividend stocks market, we recommend checking out our list of the top dividend stocks with a yield greater than 2% and an upcoming dividend.
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