Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Ryan Specialty Holdings, Inc. (NYSE:RYAN) is about to trade ex-dividend in the next three 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 a full business day. So if you miss that date, you would not show up on the company's books on the record date. In other words, investors can purchase Ryan Specialty Holdings' shares before the 10th of November in order to be eligible for the dividend, which will be paid on the 24th of November.
The company's next dividend payment will be US$0.13 per share, on the back of last year when the company paid a total of US$0.52 to shareholders. Based on the last year's worth of payments, Ryan Specialty Holdings has a trailing yield of 1.1% on the current stock price of US$48.26. If you buy this business for its dividend, you should have an idea of whether Ryan Specialty Holdings's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Ryan Specialty Holdings paid out 62% of its earnings to investors last year, a normal payout level for most businesses.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
View our latest analysis for Ryan Specialty Holdings
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings fall far enough, the company could be forced to cut its dividend. That's why it's comforting to see Ryan Specialty Holdings's earnings have been skyrocketing, up 58% per annum for the past five years.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the past three years, Ryan Specialty Holdings has increased its dividend at approximately 5.7% a year on average. Earnings per share have been growing much quicker than dividends, potentially because Ryan Specialty Holdings is keeping back more of its profits to grow the business.
To Sum It Up
From a dividend perspective, should investors buy or avoid Ryan Specialty Holdings? Earnings per share are growing nicely, and Ryan Specialty Holdings is paying out a percentage of its earnings that is around the average for dividend-paying stocks. We think this is a pretty attractive combination, and would be interested in investigating Ryan Specialty Holdings more closely.
So while Ryan Specialty Holdings looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. Be aware that Ryan Specialty Holdings is showing 2 warning signs in our investment analysis, and 1 of those is significant...
A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.