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 A-Mark Precious Metals, Inc. (NASDAQ:AMRK) is about to go ex-dividend in just 4 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. Meaning, you will need to purchase A-Mark Precious Metals’ shares before the 11th of September to receive the dividend, which will be paid on the 26th of September.
The upcoming dividend for A-Mark Precious Metals will put a total of US$1.00 per share in shareholders’ pockets, up from last year’s total dividends of US$0.80. If you buy this business for its dividend, you should have an idea of whether A-Mark Precious Metals’s dividend is reliable and sustainable. As a result, readers should always check whether A-Mark Precious Metals has been able to grow its dividends, or if the dividend might be cut.
See our latest analysis for A-Mark Precious Metals
If a company pays out more in dividends than it earned, then the dividend might become unsustainable – hardly an ideal situation. A-Mark Precious Metals is paying out just 9.2% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events.
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?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. It’s encouraging to see A-Mark Precious Metals has grown its earnings rapidly, up 52% a year for the past five years.
Many investors will assess a company’s dividend performance by evaluating how much the dividend payments have changed over time. A-Mark Precious Metals has delivered 30% dividend growth per year on average over the past eight years. It’s great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.
To Sum It Up
Has A-Mark Precious Metals got what it takes to maintain its dividend payments? When companies are growing rapidly and retaining a majority of the profits within the business, it’s usually a sign that reinvesting earnings creates more value than paying dividends to shareholders. Perhaps even more importantly – this can sometimes signal management is focused on the long term future of the business. We think this is a pretty attractive combination, and would be interested in investigating A-Mark Precious Metals more closely.
In light of that, while A-Mark Precious Metals has an appealing dividend, it’s worth knowing the risks involved with this stock. To that end, you should learn about the 2 warning signs we’ve spotted with A-Mark Precious Metals (including 1 which is a bit unpleasant).
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.
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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.