NYSE:KEY) is about to trade ex-dividend in the next four days. Investors can purchase shares before the 31st of August in order to be eligible for this dividend, which will be paid on the 15th of September.” data-reactid=”28″ type=”text”>KeyCorp (NYSE:KEY) is about to trade ex-dividend in the next four days. Investors can purchase shares before the 31st of August in order to be eligible for this dividend, which will be paid on the 15th of September.
KeyCorp’s upcoming dividend is US$0.18 a share, following on from the last 12 months, when the company distributed a total of US$0.74 per share to shareholders. Based on the last year’s worth of payments, KeyCorp stock has a trailing yield of around 5.9% on the current share price of $12.51. 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! We need to see whether the dividend is covered by earnings and if it’s 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. KeyCorp paid out more than half (66%) of its earnings last year, which is a regular payout ratio for most companies.
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.
here to see the company’s payout ratio, plus analyst estimates of its future dividends.” data-reactid=”37″ type=”text”>Click here to see the company’s payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Companies that aren’t growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. 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 explains why we’re not overly excited about KeyCorp’s flat earnings over the past five years. Better than seeing them fall off a cliff, for sure, but the best dividend stocks grow their earnings meaningfully over the long run.
The main way most investors will assess a company’s dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, 10 years ago, KeyCorp has lifted its dividend by approximately 34% a year on average.
To Sum It Up
From a dividend perspective, should investors buy or avoid KeyCorp? KeyCorp’s earnings are effectively flat over recent years, even as the company pays out more than half of its earnings to shareholders as dividends. It might be worth researching if the company is reinvesting in growth projects that could grow earnings and dividends in the future, but for now we’re on the fence about its dividend prospects.
See what analysts are forecasting, with this visualisation of its historical and future estimated earnings and cash flow.” data-reactid=”55″ type=”text”>Curious what other investors think of KeyCorp? See what analysts are forecasting, with this visualisation of its historical and future estimated earnings and cash flow.
checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.” data-reactid=”56″ type=”text”>If you’re in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.
This article by Simply Wall St is general in nature. 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.