NYSE:BBY) is about to go ex-dividend in just 4 days. You can purchase shares before the 14th of September in order to receive the dividend, which the company will pay on the 6th of October.” data-reactid=”28″>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 Best Buy Co., Inc. (NYSE:BBY) is about to go ex-dividend in just 4 days. You can purchase shares before the 14th of September in order to receive the dividend, which the company will pay on the 6th of October.
Best Buy’s next dividend payment will be US$0.55 per share. Last year, in total, the company distributed US$2.20 to shareholders. Looking at the last 12 months of distributions, Best Buy has a trailing yield of approximately 2.1% on its current stock price of $105.26. If you buy this business for its dividend, you should have an idea of whether Best Buy’s dividend is reliable and sustainable. That’s why we should always check whether the dividend payments appear sustainable, and if the company is growing.
View our latest analysis for Best Buy ” data-reactid=”30″> View our latest analysis for Best Buy
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. Best Buy paid out a comfortable 34% of its profit last year. A useful secondary check can be to evaluate whether Best Buy generated enough free cash flow to afford its dividend. What’s good is that dividends were well covered by free cash flow, with the company paying out 11% of its cash flow last year.
It’s positive to see that Best Buy’s dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.
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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Fortunately for readers, Best Buy’s earnings per share have been growing at 12% a year for the past five years. Earnings per share have been growing rapidly and the company is retaining a majority of its earnings within the business. Fast-growing businesses that are reinvesting heavily are enticing from a dividend perspective, especially since they can often increase the payout ratio later.
Another key way to measure a company’s dividend prospects is by measuring its historical rate of dividend growth. In the past 10 years, Best Buy has increased its dividend at approximately 15% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.
To Sum It Up
Should investors buy Best Buy for the upcoming dividend? Best Buy has been growing earnings at a rapid rate, and has a conservatively low payout ratio, implying that it is reinvesting heavily in its business; a sterling combination. It’s a promising combination that should mark this company worthy of closer attention.
2 warning signs for Best Buy that we recommend you consider before investing in the business.” data-reactid=”55″>On that note, you’ll want to research what risks Best Buy is facing. For example, we’ve found 2 warning signs for Best Buy that we recommend you consider before investing in the business.
a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.” data-reactid=”56″>A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising 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.
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