Yahoo Finance Income Investors Should Know That DHT Holdings, Inc. (NYSE:DHT) Goes Ex-Dividend Soon
DHT Holdings, Inc. (NYSE:DHT) stock is about to trade ex-dividend in 4 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. 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. Therefore, if you purchase DHT Holdings' shares on or after the 17th of May, you won't be eligible to receive the dividend, when it is paid on the 25th of May.
The company's next dividend payment will be US$0.23 per share, on the back of last year when the company paid a total of US$0.48 to shareholders. Based on the last year's worth of payments, DHT Holdings stock has a trailing yield of around 5.6% on the current share price of $8.56. If you buy this business for its dividend, you should have an idea of whether DHT Holdings's dividend is reliable and sustainable. As a result, readers should always check whether DHT Holdings has been able to grow its dividends, or if the dividend might be cut.
View our latest analysis for DHT Holdings
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. DHT Holdings paid out 97% of its earnings, which is more than we're comfortable with, unless there are mitigating circumstances. A useful secondary check can be to evaluate whether DHT Holdings generated enough free cash flow to afford its dividend. Thankfully its dividend payments took up just 47% of the free cash flow it generated, which is a comfortable payout ratio.
It's good to see that while DHT Holdings's dividends were not well covered by profits, at least they are affordable from a cash perspective. Still, if the company continues paying out such a high percentage of its profits, the dividend could be at risk if business turns sour.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. It's encouraging to see DHT Holdings has grown its earnings rapidly, up 68% a year for the past five years.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. DHT Holdings has seen its dividend decline 6.7% per annum on average over the past 10 years, which is not great to see. DHT Holdings is a rare case where dividends have been decreasing at the same time as earnings per share have been improving. It's unusual to see, and could point to unstable conditions in the core business, or more rarely an intensified focus on reinvesting profits.
Final Takeaway
Should investors buy DHT Holdings for the upcoming dividend? Earnings per share have been rising nicely although, even though its cashflow payout ratio is low, we question why DHT Holdings is paying out so much of its profit. While it does have some good things going for it, we're a bit ambivalent and it would take more to convince us of DHT Holdings's dividend merits.
On that note, you'll want to research what risks DHT Holdings is facing. To help with this, we've discovered 1 warning sign for DHT Holdings that you should be aware of before investing in their shares.
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.
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