Yahoo Finance Is It Smart To Buy Endeavor Group Holdings, Inc. (NYSE:EDR) Before It Goes Ex-Dividend?
It looks like Endeavor Group Holdings, Inc. (NYSE:EDR) is about to go ex-dividend in the next 4 days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Thus, you can purchase Endeavor Group Holdings' shares before the 14th of March in order to receive the dividend, which the company will pay on the 29th of March.
The company's next dividend payment will be US$0.06 per share, and in the last 12 months, the company paid a total of US$0.24 per share. Based on the last year's worth of payments, Endeavor Group Holdings has a trailing yield of 1.0% on the current stock price of US$24.46. If you buy this business for its dividend, you should have an idea of whether Endeavor Group Holdings'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.
See our latest analysis for Endeavor Group Holdings
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. Endeavor Group Holdings has a low and conservative payout ratio of just 10% of its income after tax. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. It paid out 80% of its free cash flow as dividends, which is within usual limits but will limit the company's ability to lift the dividend if there's no growth.
It's positive to see that Endeavor Group Holdings'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.
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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That's why we're optimistic about Endeavor Group Holdings's earnings, which have ripped higher, up 149% over the past year. While we'd be remiss not to point out that a year is a very short time in dividend investing, it's an encouraging sign so far.
One year is not very long in the grand scheme of things though, so we wouldn't draw too strong a conclusion based on these results.
Given that Endeavor Group Holdings has only been paying a dividend for a year, there's not much of a past history to draw insight from.
Final Takeaway
Is Endeavor Group Holdings worth buying for its dividend? Earnings per share have grown at a nice rate in recent times and over the last year, Endeavor Group Holdings paid out less than half its earnings and a bit over half its free cash flow. Endeavor Group Holdings looks solid on this analysis overall, and we'd definitely consider investigating it more closely.
While it's tempting to invest in Endeavor Group Holdings for the dividends alone, you should always be mindful of the risks involved. Case in point: We've spotted 1 warning sign for Endeavor Group Holdings 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.
