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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 Enact Holdings, Inc. (NASDAQ:ACT) is about to go ex-dividend in just three days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a 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 Enact Holdings' shares on or after the 18th of November, you won't be eligible to receive the dividend, when it is paid on the 5th of December.
The company's next dividend payment will be US$0.185 per share, on the back of last year when the company paid a total of US$1.45 to shareholders. Looking at the last 12 months of distributions, Enact Holdings has a trailing yield of approximately 4.2% on its current stock price of US$34.30. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! As a result, readers should always check whether Enact Holdings has been able to grow its dividends, or if the dividend might be cut.
Check out our latest analysis for Enact Holdings
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. Enact Holdings has a low and conservative payout ratio of just 16% of its income after tax.
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 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. If earnings fall far enough, the company could be forced to cut its dividend. It's encouraging to see Enact Holdings has grown its earnings rapidly, up 25% a year for the past five years.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last three years, Enact Holdings has lifted its dividend by approximately 37% a year on average. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.