Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Crawford & Company (NYSE:CRD.B) is about to go ex-dividend in just 4 days. Investors can purchase shares before the 17th of August in order to be eligible for this dividend, which will be paid on the 2nd of September.
Crawford's next dividend payment will be US$0.04 per share, on the back of last year when the company paid a total of US$0.12 to shareholders. Based on the last year's worth of payments, Crawford has a trailing yield of 1.5% on the current stock price of $8.02. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether Crawford can afford its dividend, and if the dividend could grow.
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. Crawford'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.
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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Crawford was unprofitable last year, but at least the general trend suggests its earnings have been improving over the past five years. Even so, an unprofitable company whose business does not quickly recover is usually not a good candidate for dividend investors.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the past 10 years, Crawford has increased its dividend at approximately 4.1% a year on average. Earnings per share have been growing much quicker than dividends, potentially because Crawford is keeping back more of its profits to grow the business.
Remember, you can always get a snapshot of Crawford's financial health, by checking our visualisation of its financial health, here.
The Bottom Line
Is Crawford an attractive dividend stock, or better left on the shelf? It's hard to get used to Crawford paying a dividend despite reporting a loss over the past year. It doesn't appear an outstanding opportunity, but could be worth a closer look.
With that being said, if dividends aren't your biggest concern with Crawford, you should know about the other risks facing this business. Our analysis shows 2 warning signs for Crawford that we strongly recommend you have a look at before investing in the company.
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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