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 Seanergy Maritime Holdings Corp. (NASDAQ:SHIP) is about to go ex-dividend in just three days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible 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 Seanergy Maritime Holdings' shares before the 22nd of March to receive the dividend, which will be paid on the 10th of April.
The company's next dividend payment will be US$0.10 per share, and in the last 12 months, the company paid a total of US$0.10 per share. Calculating the last year's worth of payments shows that Seanergy Maritime Holdings has a trailing yield of 1.1% on the current share price of US$8.73. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether Seanergy Maritime Holdings has been able to grow its dividends, or if the dividend might be cut.
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. Seanergy Maritime Holdings paid a dividend last year despite being unprofitable. This might be a one-off event, but it's not a sustainable state of affairs in the long run. A useful secondary check can be to evaluate whether Seanergy Maritime Holdings generated enough free cash flow to afford its dividend. The good news is it paid out just 20% of its free cash flow in the last year.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's encouraging to see Seanergy Maritime Holdings has grown its earnings rapidly, up 95% a year for the past five years. Seanergy Maritime Holdings is paying out less than half its earnings and cash flow, while simultaneously growing earnings per share at a rapid clip. Companies with growing earnings and low payout ratios are often the best long-term dividend stocks, as the company can both grow its earnings and increase the percentage of earnings that it pays out, essentially multiplying the dividend.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Seanergy Maritime Holdings's dividend payments per share have declined at 68% per year on average over the past two years, which is uninspiring. It's unusual to see earnings per share increasing at the same time as dividends per share have been in decline. We'd hope it's because the company is reinvesting heavily in its business, but it could also suggest business is lumpy.
Final Takeaway
Is Seanergy Maritime Holdings worth buying for its dividend? Earnings per share have been rising nicely although, even though its cashflow payout ratio is low, we question why Seanergy Maritime Holdings is paying out so much of its profit. In summary, it's hard to get excited about Seanergy Maritime Holdings from a dividend perspective.
So while Seanergy Maritime Holdings looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. To help with this, we've discovered 4 warning signs for Seanergy Maritime Holdings (1 is a bit concerning!) that you ought to be aware of before buying the shares.
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.