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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 Marriott Vacations Worldwide Corporation (NYSE:VAC) is about to go ex-dividend in just 4 days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is important as the process of settlement involves a full business day. So if you miss that date, you would not show up on the company's books on the record date. Meaning, you will need to purchase Marriott Vacations Worldwide's shares before the 5th of March to receive the dividend, which will be paid on the 19th of March.
The company's next dividend payment will be US$0.79 per share. Last year, in total, the company distributed US$3.16 to shareholders. Based on the last year's worth of payments, Marriott Vacations Worldwide stock has a trailing yield of around 4.1% on the current share price of US$77.47. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether Marriott Vacations Worldwide can afford its dividend, and if the dividend could grow.
Check out our latest analysis for Marriott Vacations Worldwide
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. Marriott Vacations Worldwide paid out 53% of its earnings to investors last year, a normal payout level for most businesses.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
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 Marriott Vacations Worldwide's earnings per share have risen 15% per annum over the last five years. Marriott Vacations Worldwide is paying out a bit over half its earnings, which suggests the company is striking a balance between reinvesting in growth, and paying dividends. Given the quick rate of earnings per share growth and current level of payout, there may be a chance of further dividend increases in the future.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Since the start of our data, 10 years ago, Marriott Vacations Worldwide has lifted its dividend by approximately 12% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.