Regular readers will know that we love our dividends at Simply Wall St, which is why it’s exciting to see Voya Financial, Inc. (NYSE:VOYA) is about to trade ex-dividend in the next 3 days. This means that investors who purchase shares on or after the 28th of August will not receive the dividend, which will be paid on the 28th of September.
Voya Financial’s next dividend payment will be US$0.15 per share, on the back of last year when the company paid a total of US$0.60 to shareholders. Calculating the last year’s worth of payments shows that Voya Financial has a trailing yield of 1.2% on the current share price of $50.08. If you buy this business for its dividend, you should have an idea of whether Voya Financial’s dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it’s growing.
Check out our latest analysis for Voya Financial
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. Voya Financial paid out just 17% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances.
Generally speaking, the lower a company’s payout ratios, the more resilient its dividend usually is.
Click here to see the company’s payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
When earnings decline, dividend companies become much harder to analyse and own safely. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we’re discomforted by Voya Financial’s 17% per annum decline in earnings in the past five years. When earnings per share fall, the maximum amount of dividends that can be paid also falls.
Many investors will assess a company’s dividend performance by evaluating how much the dividend payments have changed over time. Voya Financial has delivered 47% dividend growth per year on average over the past seven years.
To Sum It Up
Is Voya Financial an attractive dividend stock, or better left on the shelf? Voya Financial’s earnings per share are down over the past five years, although it has the cushion of a low payout ratio, which would suggest a cut to the dividend is relatively unlikely. We’re unconvinced on the company’s merits, and think there might be better opportunities out there.
With that being said, if dividends aren’t your biggest concern with Voya Financial, you should know about the other risks facing this business. To help with this, we’ve discovered 3 warning signs for Voya Financial (2 make us uncomfortable!) that you ought to be aware of before buying the shares.
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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