NYSE:VGR) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. This means that investors who purchase shares on or after the 16th of September will not receive the dividend, which will be paid on the 29th of September.” data-reactid=”28″>Readers hoping to buy Vector Group Ltd. (NYSE:VGR) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. This means that investors who purchase shares on or after the 16th of September will not receive the dividend, which will be paid on the 29th of September.
Vector Group’s next dividend payment will be US$0.20 per share. Last year, in total, the company distributed US$0.80 to shareholders. Looking at the last 12 months of distributions, Vector Group has a trailing yield of approximately 7.8% on its current stock price of $10.31. 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 check whether the dividend payments are covered, and if earnings are growing.
Check out our latest analysis for Vector Group ” data-reactid=”30″> Check out our latest analysis for Vector Group
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. Last year, Vector Group paid out 270% of its profit to shareholders in the form of dividends. This is not sustainable behaviour and requires a closer look on behalf of the purchaser. A useful secondary check can be to evaluate whether Vector Group generated enough free cash flow to afford its dividend. It paid out more than half (52%) of its free cash flow in the past year, which is within an average range for most companies.
It’s good to see that while Vector Group’s dividends were not covered by profits, at least they are affordable from a cash perspective. If executives were to continue paying more in dividends than the company reported in profits, we’d view this as a warning sign. Extraordinarily few companies are capable of persistently paying a dividend that is greater than their profits.
here to see how much of its profit Vector Group paid out over the last 12 months.” data-reactid=”37″>Click here to see how much of its profit Vector Group paid out over the last 12 months.
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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we’re encouraged by the steady growth at Vector Group, with earnings per share up 9.9% on average over the last five years.
Another key way to measure a company’s dividend prospects is by measuring its historical rate of dividend growth. Vector Group’s dividend payments per share have declined at 1.5% per year on average over the past 10 years, which is uninspiring.
To Sum It Up
From a dividend perspective, should investors buy or avoid Vector Group? While earnings per share have been growing slowly, Vector Group is paying out an uncomfortably high percentage of its earnings. However it did pay out a lower percentage of its cashflow. Overall it doesn’t look like the most suitable dividend stock for a long-term buy and hold investor.
We’ve identified 5 warning signs with Vector Group (at least 1 which makes us a bit uncomfortable), and understanding them should be part of your investment process.” data-reactid=”55″>Having said that, if you’re looking at this stock without much concern for the dividend, you should still be familiar of the risks involved with Vector Group. We’ve identified 5 warning signs with Vector Group (at least 1 which makes us a bit uncomfortable), and understanding them should be part of your investment process.
a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.” data-reactid=”60″>We wouldn’t recommend just buying the first dividend stock you see, though. Here’s a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
Get in touch with us directly. Alternatively, email [email protected].” data-reactid=”61″>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. 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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