Yahoo Finance Willis Towers Watson Public Limited Company (NASDAQ:WTW) Looks Like A Good Stock, And It's Going Ex-Dividend Soon
Willis Towers Watson Public Limited Company (NASDAQ:WTW) stock is about to trade ex-dividend in four 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. 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. Accordingly, Willis Towers Watson investors that purchase the stock on or after the 30th of March will not receive the dividend, which will be paid on the 17th of April.
The company's next dividend payment will be US$0.84 per share, on the back of last year when the company paid a total of US$3.28 to shareholders. Calculating the last year's worth of payments shows that Willis Towers Watson has a trailing yield of 1.5% on the current share price of $226.22. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. We need to see whether the dividend is covered by earnings and if it's growing.
See our latest analysis for Willis Towers Watson
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. That's why it's good to see Willis Towers Watson paying out a modest 35% of its earnings.
When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. For this reason, we're glad to see Willis Towers Watson's earnings per share have risen 19% per annum over the last five years.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the past 10 years, Willis Towers Watson has increased its dividend at approximately 1.6% a year on average. Earnings per share have been growing much quicker than dividends, potentially because Willis Towers Watson is keeping back more of its profits to grow the business.
To Sum It Up
From a dividend perspective, should investors buy or avoid Willis Towers Watson? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. Overall, Willis Towers Watson looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
While it's tempting to invest in Willis Towers Watson for the dividends alone, you should always be mindful of the risks involved. Case in point: We've spotted 1 warning sign for Willis Towers Watson you should be aware of.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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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