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Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Piper Sandler Companies (NYSE:PIPR) is about to go ex-dividend in just 4 days. You will need to purchase shares before the 27th of August to receive the dividend, which will be paid on the 11th of September.
Piper Sandler Companies's next dividend payment will be US$0.30 per share, and in the last 12 months, the company paid a total of US$1.95 per share. Based on the last year's worth of payments, Piper Sandler Companies stock has a trailing yield of around 2.6% on the current share price of $75.5. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether Piper Sandler Companies can afford its dividend, and if the dividend could grow.
View our latest analysis for Piper Sandler Companies
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 Piper Sandler Companies paying out a modest 46% of its earnings.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Businesses with shrinking earnings are tricky from a dividend perspective. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Readers will understand then, why we're concerned to see Piper Sandler Companies's earnings per share have dropped 5.6% a year over the past five years. Ultimately, when earnings per share decline, the size of the pie from which dividends can be paid, shrinks.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Piper Sandler Companies has delivered an average of 12% per year annual increase in its dividend, based on the past four years of dividend payments.
To Sum It Up
Is Piper Sandler Companies an attractive dividend stock, or better left on the shelf? Earnings per share have shrunk noticeably in recent years, although we like that the company has a low payout ratio. This could suggest a cut to the dividend may not be a major risk in the near future. We're unconvinced on the company's merits, and think there might be better opportunities out there.