Pzena Investment Management, Inc (NYSE:PZN) is about to trade ex-dividend in the next three days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Thus, you can purchase Pzena Investment Management's shares before the 4th of August in order to receive the dividend, which the company will pay on the 19th of August.
The company's next dividend payment will be US$0.03 per share. Last year, in total, the company distributed US$0.62 to shareholders. Last year's total dividend payments show that Pzena Investment Management has a trailing yield of 6.6% on the current share price of $9.43. If you buy this business for its dividend, you should have an idea of whether Pzena Investment Management'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.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Pzena Investment Management paid out more than half (71%) of its earnings last year, which is a regular payout ratio for most companies.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
Have Earnings And Dividends Been Growing?
When earnings decline, dividend companies become much harder to analyse and own safely. If earnings fall far enough, the company could be forced to cut its dividend. That's why it's not ideal to see Pzena Investment Management's earnings per share have been shrinking at 2.1% a year over the previous five years.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Pzena Investment Management has delivered an average of 18% per year annual increase in its dividend, based on the past 10 years of dividend payments. Growing the dividend payout ratio while earnings are declining can deliver nice returns for a while, but it's always worth checking for when the company can't increase the payout ratio any more - because then the music stops.
Has Pzena Investment Management got what it takes to maintain its dividend payments? We're not overly enthused to see Pzena Investment Management's earnings in retreat at the same time as the company is paying out more than half of its earnings as dividends to shareholders. Pzena Investment Management doesn't appear to have a lot going for it, and we're not inclined to take a risk on owning it for the dividend.
With that in mind though, if the poor dividend characteristics of Pzena Investment Management don't faze you, it's worth being mindful of the risks involved with this business. For example - Pzena Investment Management has 2 warning signs we think you should be aware of.
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.
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