Don't Race Out To Buy AXIS Capital Holdings Limited (NYSE:AXS) Just Because It's Going Ex-Dividend
It looks like AXIS Capital Holdings Limited (NYSE:AXS) is about to go ex-dividend in the next three days. This means that investors who purchase shares on or after the 1st of October will not receive the dividend, which will be paid on the 15th of October.
AXIS Capital Holdings's next dividend payment will be US$0.41 per share. Last year, in total, the company distributed US$1.64 to shareholders. Based on the last year's worth of payments, AXIS Capital Holdings stock has a trailing yield of around 3.8% on the current share price of $42.91. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether AXIS Capital Holdings has been able to grow its dividends, or if the dividend might be cut.
See our latest analysis for AXIS Capital Holdings
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. AXIS Capital Holdings's dividend is not well covered by earnings, as the company lost money last year. This is not a sustainable state of affairs, so it would be worth investigating if earnings are expected to recover.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Businesses with shrinking earnings are tricky from a dividend perspective. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. AXIS Capital Holdings 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. Since the start of our data, 10 years ago, AXIS Capital Holdings has lifted its dividend by approximately 6.9% a year on average.
We update our analysis on AXIS Capital Holdings every 24 hours, so you can always get the latest insights on its financial health, here.
Final Takeaway
Has AXIS Capital Holdings got what it takes to maintain its dividend payments? It's definitely not great to see that it paid a dividend despite reporting a loss last year. Worse, the general trend in its earnings looks negative in recent times. These characteristics don't generally lead to outstanding dividend performance, and investors may not be happy with the results of owning this stock for its dividend.
Having said that, if you're looking at this stock without much concern for the dividend, you should still be familiar of the risks involved with AXIS Capital Holdings. Every company has risks, and we've spotted 1 warning sign for AXIS Capital Holdings you should know about.
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.
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