Advertisement

Income Investors Should Know That Healthcare Services Group, Inc. (NASDAQ:HCSG) Goes Ex-Dividend Soon

Readers hoping to buy Healthcare Services Group, Inc. (NASDAQ:HCSG) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. This means that investors who purchase shares on or after the 27th of February will not receive the dividend, which will be paid on the 27th of March.

Healthcare Services Group's next dividend payment will be US$0.20 per share, and in the last 12 months, the company paid a total of US$0.81 per share. Last year's total dividend payments show that Healthcare Services Group has a trailing yield of 2.6% on the current share price of $30.45. 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 Healthcare Services Group has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for Healthcare Services Group

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Healthcare Services Group paid out 92% of its earnings, which is more than we're comfortable with, unless there are mitigating circumstances.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

NasdaqGS:HCSG Historical Dividend Yield, February 22nd 2020
NasdaqGS:HCSG Historical Dividend Yield, February 22nd 2020

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. It's encouraging to see Healthcare Services Group has grown its earnings rapidly, up 23% a year 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 ten years, Healthcare Services Group has increased its dividend at approximately 5.3% a year on average. Earnings per share have been growing much quicker than dividends, potentially because Healthcare Services Group is keeping back more of its profits to grow the business.

Final Takeaway

Has Healthcare Services Group got what it takes to maintain its dividend payments? We're not enthused to see Healthcare Services Group's dividend was not well covered by earnings over the last year, although it is great to see earnings growing. We think this is a pretty attractive combination, and would be interested in investigating Healthcare Services Group more closely.

Wondering what the future holds for Healthcare Services Group? See what the nine analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow

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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.