NASDAQ:AVT) is about to trade ex-dividend in the next 4 days. If you purchase the stock on or after the 8th of September, you won’t be eligible to receive this dividend, when it is paid on the 23rd of September.” data-reactid=”28″ type=”text”>Avnet, Inc. (NASDAQ:AVT) is about to trade ex-dividend in the next 4 days. If you purchase the stock on or after the 8th of September, you won’t be eligible to receive this dividend, when it is paid on the 23rd of September.
Avnet’s next dividend payment will be US$0.21 per share. Last year, in total, the company distributed US$0.84 to shareholders. Based on the last year’s worth of payments, Avnet stock has a trailing yield of around 2.9% on the current share price of $28.93. If you buy this business for its dividend, you should have an idea of whether Avnet’s dividend is reliable and sustainable. So we need to investigate whether Avnet can afford its dividend, and if the dividend could grow.
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. Avnet reported a loss last year, so it’s not great to see that it has continued paying a dividend. With the recent loss, it’s important to check if the business generated enough cash to pay its dividend. If cash earnings don’t cover the dividend, the company would have to pay dividends out of cash in the bank, or by borrowing money, neither of which is long-term sustainable. Luckily it paid out just 13% of its free cash flow last year.
here to see the company’s payout ratio, plus analyst estimates of its future dividends.” data-reactid=”36″ 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 with falling earnings are riskier for dividend shareholders. If earnings fall far enough, the company could be forced to cut its dividend. Avnet reported a loss last year, and the general trend suggests its earnings have also been declining in recent years, making us wonder if the dividend is at risk.
Many investors will assess a company’s dividend performance by evaluating how much the dividend payments have changed over time. Avnet has delivered an average of 4.9% per year annual increase in its dividend, based on the past seven years of dividend payments.
our latest analysis on Avnet’s balance sheet health here.” data-reactid=”52″ type=”text”>Get our latest analysis on Avnet’s balance sheet health here.
The Bottom Line
Should investors buy Avnet for the upcoming dividend? It’s hard to get used to Avnet paying a dividend despite reporting a loss over the past year. At least the dividend was covered by free cash flow, however. It’s not an attractive combination from a dividend perspective, and we’re inclined to pass on this one for the time being.
1 warning sign we think you should be aware of.” data-reactid=”55″ type=”text”>With that being said, if you’re still considering Avnet as an investment, you’ll find it beneficial to know what risks this stock is facing. For example – Avnet has 1 warning sign we think you should be aware of.
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.