Yahoo Finance Why You Might Be Interested In Nasdaq, Inc. (NASDAQ:NDAQ) For Its Upcoming Dividend
It looks like Nasdaq, Inc. (NASDAQ:NDAQ) is about to go ex-dividend in the next 4 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 of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Therefore, if you purchase Nasdaq's shares on or after the 13th of September, you won't be eligible to receive the dividend, when it is paid on the 27th of September.
The company's next dividend payment will be US$0.24 per share, and in the last 12 months, the company paid a total of US$0.96 per share. Based on the last year's worth of payments, Nasdaq stock has a trailing yield of around 1.3% on the current share price of US$71.95. If you buy this business for its dividend, you should have an idea of whether Nasdaq's dividend is reliable and sustainable. So we need to investigate whether Nasdaq can afford its dividend, and if the dividend could grow.
Check out our latest analysis for Nasdaq
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Nasdaq paid out 52% 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.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. For this reason, we're glad to see Nasdaq's earnings per share have risen 12% per annum over the last five years.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last 10 years, Nasdaq has lifted its dividend by approximately 19% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.
Final Takeaway
Should investors buy Nasdaq for the upcoming dividend? Earnings per share are growing at an attractive rate, and Nasdaq is paying out a bit over half its profits. In summary, Nasdaq appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.
While it's tempting to invest in Nasdaq for the dividends alone, you should always be mindful of the risks involved. Be aware that Nasdaq is showing 2 warning signs in our investment analysis, and 1 of those is significant...
Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
