In This Article:
NexLiving Communities Inc. (CVE:NXLV) is about to trade ex-dividend in the next four days. The ex-dividend date generally occurs two days 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 an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. This means that investors who purchase NexLiving Communities' shares on or after the 7th of March will not receive the dividend, which will be paid on the 28th of March.
The company's next dividend payment will be CA$0.01 per share. Last year, in total, the company distributed CA$0.04 to shareholders. Looking at the last 12 months of distributions, NexLiving Communities has a trailing yield of approximately 2.4% on its current stock price of CA$1.66. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. We need to see whether the dividend is covered by earnings and if it's growing.
See our latest analysis for NexLiving Communities
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. NexLiving Communities paid out just 9.9% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Luckily it paid out just 8.4% of its free cash flow last year.
It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That's why it's comforting to see NexLiving Communities's earnings have been skyrocketing, up 23% per annum for the past five years. NexLiving Communities looks like a real growth company, with earnings per share growing at a cracking pace and the company reinvesting most of its profits in the business.