NYSE:BAX) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. Investors can purchase shares before the 28th of August in order to be eligible for this dividend, which will be paid on the 1st of October.” data-reactid=”28″>Readers hoping to buy Baxter International Inc. (NYSE:BAX) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. Investors can purchase shares before the 28th of August in order to be eligible for this dividend, which will be paid on the 1st of October.
Baxter International’s upcoming dividend is US$0.24 a share, following on from the last 12 months, when the company distributed a total of US$0.98 per share to shareholders. Based on the last year’s worth of payments, Baxter International has a trailing yield of 1.2% on the current stock price of $83.09. We love seeing companies pay a dividend, but it’s also important to be sure that laying the golden eggs isn’t going to kill our golden goose! That’s why we should always check whether the dividend payments appear sustainable, and if the company is growing.
See our latest analysis for Baxter International ” data-reactid=”30″> See our latest analysis for Baxter International
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. Fortunately Baxter International’s payout ratio is modest, at just 48% of profit. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. Fortunately, it paid out only 28% of its free cash flow in the past year.
It’s encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don’t drop precipitously.
here to see the company’s payout ratio, plus analyst estimates of its future dividends.” data-reactid=”37″>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. For this reason, we’re glad to see Baxter International’s earnings per share have risen 17% per annum over the last five years. Earnings per share have been growing rapidly and the company is retaining a majority of its earnings within the business. This will make it easier to fund future growth efforts and we think this is an attractive combination – plus the dividend can always be increased later.
Another key way to measure a company’s dividend prospects is by measuring its historical rate of dividend growth. Baxter International has seen its dividend decline 1.7% per annum on average over the past 10 years, which is not great to see.
Has Baxter International got what it takes to maintain its dividend payments? Baxter International has grown its earnings per share while simultaneously reinvesting in the business. Unfortunately it’s cut the dividend at least once in the past 10 years, but the conservative payout ratio makes the current dividend look sustainable. Baxter International looks solid on this analysis overall, and we’d definitely consider investigating it more closely.
3 warning signs we think you should be aware of.” data-reactid=”55″>On that note, you’ll want to research what risks Baxter International is facing. For example – Baxter International has 3 warning signs we think you should be aware of.
a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.” data-reactid=”60″>We wouldn’t recommend just buying the first dividend stock you see, though. Here’s a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
Get in touch with us directly. Alternatively, email [email protected].” data-reactid=”61″>This article by Simply Wall St is general in nature. 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.