Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Assurant, Inc. (NYSE:AIZ) is about to trade ex-dividend in the next 4 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.   Accordingly, Assurant investors that purchase the stock on or after the 10th of June will not receive the dividend, which will be paid on the 24th of June.  

The company's next dividend payment will be US$0.72 per share, and in the last 12 months, the company paid a total of US$2.88 per share.  Based on the last year's worth of payments, Assurant stock has a trailing yield of around 1.7% on the current share price of US$171.80.    We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose!  That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut.   Assurant is paying out just 20% 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.

NYSE:AIZ Historic Dividend June 5th 2024

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 earnings fall far enough, the company could be forced to cut its dividend.     It's encouraging to see Assurant has grown its earnings rapidly, up 30% a year for the past five years.    

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth.     Assurant has delivered 11% dividend growth per year on average over the past 10 years.      Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.  

Final Takeaway

Is Assurant worth buying for its dividend?      Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business.  Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business.        In summary, Assurant appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.  

So while Assurant looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock.     Every company has risks, and we've spotted 1 warning sign for Assurant you should know about.  

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.

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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.