Yahoo Finance Enact Holdings, Inc. (NASDAQ:ACT) Pays A US$0.87 Dividend In Just Four Days
It looks like Enact Holdings, Inc. (NASDAQ:ACT) is about to go ex-dividend in the next 4 days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. This means that investors who purchase Enact Holdings' shares on or after the 15th of November will not receive the dividend, which will be paid on the 5th of December.
The company's next dividend payment will be US$0.87 per share, on the back of last year when the company paid a total of US$1.35 to shareholders. Last year's total dividend payments show that Enact Holdings has a trailing yield of 4.9% on the current share price of $27.52. If you buy this business for its dividend, you should have an idea of whether Enact Holdings's dividend is reliable and sustainable. So we need to investigate whether Enact Holdings can afford its dividend, and if the dividend could grow.
Check out our latest analysis for Enact Holdings
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. Enact Holdings has a low and conservative payout ratio of just 15% of its income after tax.
Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. With that in mind, we're not enthused to see that Enact Holdings's earnings per share have remained effectively flat over the past five years. Better than seeing them fall off a cliff, for sure, but the best dividend stocks grow their earnings meaningfully over the long run.
Unfortunately Enact Holdings has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.
Final Takeaway
From a dividend perspective, should investors buy or avoid Enact Holdings? Enact Holdings's earnings per share have not grown at all in recent years, although we like that it is paying out a low percentage of its earnings. At best we would put it on a watch-list to see if business conditions improve, as it doesn't look like a clear opportunity right now.
With that being said, if dividends aren't your biggest concern with Enact Holdings, you should know about the other risks facing this business. Every company has risks, and we've spotted 2 warning signs for Enact Holdings (of which 1 can't be ignored!) 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.
