Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Blackstone Inc.( NYSE:BX ) is about to trade ex-dividend in the next two 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. 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. Therefore, if you purchase Blackstone's shares on or after the 4th of May, you won't be eligible to receive the dividend, when it is paid on the 11th of May.
The company's upcoming dividend is US$1.16 a share, following on from the last 12 months, when the company distributed a total of US$4.74 per share to shareholders. Based on the last year's worth of payments, Blackstone stock has a trailing yield of around 3.8% on the current share price of US$125.58. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether Blackstone can afford its dividend, and if the dividend could grow.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Blackstone paid out 127% of profit in the past year, which we think is typically not sustainable unless there are mitigating characteristics such as unusually strong cash flow or a large cash balance.
Generally, the higher a company's payout ratio, the more the dividend is at risk of being reduced.
See our latest analysis for Blackstone
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 earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That's why it's comforting to see Blackstone's earnings have been skyrocketing, up 21% per annum 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. In the past 10 years, Blackstone has increased its dividend at approximately 5.7% a year on average. Earnings per share have been growing much quicker than dividends, potentially because Blackstone is keeping back more of its profits to grow the business.
The Bottom Line
Should investors buy Blackstone for the upcoming dividend? We're not enthused to see Blackstone's dividend was not well covered by earnings over the last year, although it is great to see earnings growing. We're unconvinced on the company's merits, and think there might be better opportunities out there.
If you want to look further into Blackstone, it's worth knowing the risks this business faces. Every company has risks, and we've spotted 2 warning signs for Blackstone (of which 1 makes us a bit uncomfortable!) 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.
