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Skyworks Solutions, Inc. (NASDAQ:SWKS) is about to trade ex-dividend in the next 4 days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Therefore, if you purchase Skyworks Solutions' shares on or after the 20th of November, you won't be eligible to receive the dividend, when it is paid on the 12th of December.
The company's next dividend payment will be US$0.68 per share. Last year, in total, the company distributed US$2.72 to shareholders. Based on the last year's worth of payments, Skyworks Solutions has a trailing yield of 2.9% on the current stock price of $92.85. 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 Skyworks Solutions has been able to grow its dividends, or if the dividend might be cut.
See our latest analysis for Skyworks Solutions
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. That's why it's good to see Skyworks Solutions paying out a modest 41% of its earnings. A useful secondary check can be to evaluate whether Skyworks Solutions generated enough free cash flow to afford its dividend. It distributed 25% of its free cash flow as dividends, a comfortable payout level for most companies.
It's positive to see that Skyworks Solutions's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.
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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. This is why it's a relief to see Skyworks Solutions earnings per share are up 4.0% per annum over the last five years. Recent earnings growth has been limited. Yet there are several ways to grow the dividend, and one of them is simply that the company may choose to pay out more of its earnings as dividends.