Common readers will know that we love our dividends at Merely Wall St, which is why it is thrilling to see Penske Automotive Group, Inc. (NYSE:PAG) is about to commerce ex-dividend within the subsequent 4 days. The ex-dividend date is one enterprise day earlier than the document date, which is the closing date for shareholders to be current on the corporate’s books to be eligible for a dividend fee. You will need to concentrate on the ex-dividend date as a result of any commerce on the inventory must have been settled on or earlier than the document date. Which means, you have to to buy Penske Automotive Group’s shares earlier than the ninth of February to obtain the dividend, which might be paid on the first of March.
The corporate’s upcoming dividend is US$0.47 a share, following on from the final 12 months, when the corporate distributed a complete of US$1.84 per share to shareholders. Calculating the final 12 months’s price of funds reveals that Penske Automotive Group has a trailing yield of 1.9% on the present share worth of $100.8. Dividends are a serious contributor to funding returns for long run holders, however provided that the dividend continues to be paid. So we have to examine whether or not the dividend funds are coated, and if earnings are rising.
See our newest evaluation for Penske Automotive Group
Dividends are normally paid out of firm earnings, so if an organization pays out greater than it earned then its dividend is normally at higher threat of being lower. Penske Automotive Group has a low and conservative payout ratio of simply 13% of its earnings after tax. A helpful secondary examine may be to judge whether or not Penske Automotive Group generated sufficient free money movement to afford its dividend. What’s good is that dividends had been properly coated by free money movement, with the corporate paying out 9.6% of its money movement final 12 months.
It is encouraging to see that the dividend is roofed by each revenue and money movement. This usually suggests the dividend is sustainable, so long as earnings do not drop precipitously.
Click on right here to see the corporate’s payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Rising?
Companies with sturdy development prospects normally make the most effective dividend payers, as a result of it is simpler to develop dividends when earnings per share are bettering. If enterprise enters a downturn and the dividend is lower, the corporate may see its worth fall precipitously. That is why it is comforting to see Penske Automotive Group’s earnings have been skyrocketing, up 30% each year for the previous 5 years. Penske Automotive Group earnings per share have been sprinting forward just like the Highway Runner at a monitor and area day; scarcely stopping even for a cheeky “beep-beep”. We additionally like that it’s reinvesting most of its earnings in its enterprise.’
Many traders will assess an organization’s dividend efficiency by evaluating how a lot the dividend funds have modified over time. Because the begin of our information, 10 years in the past, Penske Automotive Group has lifted its dividend by roughly 21% a 12 months on common. It is nice to see earnings per share rising quickly over a number of years, and dividends per share rising proper together with it.
The Backside Line
Has Penske Automotive Group acquired what it takes to keep up its dividend funds? It is nice that Penske Automotive Group is rising earnings per share whereas concurrently paying out a low proportion of each its earnings and money movement. It is disappointing to see the dividend has been lower at the very least as soon as previously, however as issues stand now, the low payout ratio suggests a conservative method to dividends, which we like. Penske Automotive Group seems stable on this evaluation total, and we would undoubtedly contemplate investigating it extra intently.
So whereas Penske Automotive Group seems good from a dividend perspective, it is at all times worthwhile being updated with the dangers concerned on this inventory. We have recognized 3 warning indicators with Penske Automotive Group (at the very least 1 which is a bit disagreeable), and understanding these must be a part of your funding course of.
We would not advocate simply shopping for the primary dividend inventory you see, although. This is a listing of fascinating dividend shares with a higher than 2% yield and an upcoming dividend.
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This text by Merely Wall St is normal in nature. We offer commentary based mostly on historic information and analyst forecasts solely utilizing an unbiased methodology and our articles aren’t supposed to be monetary recommendation. It doesn’t represent a suggestion to purchase or promote any inventory, and doesn’t take account of your targets, or your monetary scenario. We purpose to deliver you long-term centered evaluation pushed by basic information. Notice that our evaluation could not issue within the newest price-sensitive firm bulletins or qualitative materials. Merely Wall St has no place in any shares talked about.