The New York Times Company (NYSE:NYT) The stock is set to trade ex-dividend in 3 days. The ex-dividend date is one business day before a company’s record date, which is the date the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is important because each time a stock is bought or sold, the transaction takes at least two business days to settle. As a result, New York Times investors who buy the stock on or after April 5 will not receive the dividend, which will be paid on April 21.
The company’s next dividend is $0.09 per share, following the last 12 months when the company distributed a total of $0.28 per share to shareholders. Based on last year’s payouts, The New York Times has a 0.8% yield on the current stock price of $45.84. If you’re buying this company for its dividend, you should have some idea of the reliability and sustainability of the New York Times dividend. That’s why we always have to check if the dividend payouts seem sustainable and if the business is growing.
Check out our latest analysis for the New York Times
Dividends are usually paid out of company earnings, so if a company pays out more than it has earned, its dividend is usually at risk of being reduced. The New York Times paid out only 21% of its profits last year, which we believe is relatively low and leaves plenty of room for unforeseen circumstances. Still, cash flow is usually more important than earnings in assessing the sustainability of dividends, so we always need to check whether the company has generated enough cash to pay its dividend. The good thing is that dividends have been well covered by free cash flow, with the company paying out 19% of its free cash flow last year.
It is positive to see that the New York Times dividend is covered by both earnings and cash flow, as this is generally a sign that the dividend is sustainable, and a lower payout ratio generally suggests greater safety margin before the dividend is reduced.
Click here to see the company’s payout ratio, as well as analysts’ estimates of its future dividends.
Have earnings and dividends increased?
Companies with strong growth prospects are generally the best dividend payers because it is easier to increase dividends when earnings per share improve. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to sell strongly at the same time. That’s why it’s heartening to see that The New York Times’ revenue has skyrocketed, growing 47% annually over the past five years. New York Times earnings per share sprinted like the Road Runner on a day of athletics; barely stopping even for a cheeky “beep-beep”. We also like that he reinvests most of his profits back into his business.
Most investors primarily gauge a company’s dividend prospects by checking the historical rate of dividend growth. The New York Times has recorded dividend growth of 9.4% per year on average over the past nine years. We are pleased to see dividends increasing alongside earnings over several years, which may be a sign that the company intends to share the growth with shareholders.
Should Investors Buy The New York Times For The Next Dividend? The New York Times has been growing its profits at a rapid pace and has a moderately low payout ratio, implying that it is reinvesting heavily in its business; a perfect combination. It’s a promising combination that should mark this company worthy of attention.
With this in mind, an essential part of thorough stock research is to be aware of all the risks stocks currently face. For example, we found 1 warning sign for the New York Times which we recommend you consider before investing in the company.
A common investment mistake is to buy the first good stock you see. Here you can find a complete list of high yielding dividend stocks.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.