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Erie Indemnity Company (NASDAQ:ERIE) is about to trade ex-dividend in the next 4 days. You will need to purchase shares before the 4th of January to receive the dividend, which will be paid on the 20th of January.
Erie Indemnity's next dividend payment will be US$1.04 per share. Last year, in total, the company distributed US$3.86 to shareholders. Looking at the last 12 months of distributions, Erie Indemnity has a trailing yield of approximately 1.6% on its current stock price of $242.09. If you buy this business for its dividend, you should have an idea of whether Erie Indemnity'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.
See our latest analysis for Erie Indemnity
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. Erie Indemnity is paying out an acceptable 70% of its profit, a common payout level among most companies.
Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.
Click here to see how much of its profit Erie Indemnity paid out over the last 12 months.
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. For this reason, we're glad to see Erie Indemnity's earnings per share have risen 12% per annum over the last 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 last 10 years, Erie Indemnity has lifted its dividend by approximately 7.2% a year on average. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.
Final Takeaway
Is Erie Indemnity worth buying for its dividend? Earnings per share are growing at an attractive rate, and Erie Indemnity is paying out a bit over half its profits. Overall, Erie Indemnity looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
Want to learn more about Erie Indemnity? Here's a visualisation of its historical rate of revenue and earnings growth.