There’s a lot to like about Republic Services’ upcoming US $ 0.42 dividend (NYSE: RSG)
Some investors rely on dividends to grow their wealth, and if you’re one of those dividend sleuths, you might be intrigued to know that Republic Services, Inc. (NYSE: RSG) is set to be ex-dividend in just 4 days. The ex-dividend date occurs one day before the registration date which is the day on which shareholders must be entered in the books of the company to receive a dividend. The ex-dividend date is important because the settlement process involves two full business days. So if you miss this date, you would not appear on the company’s books on the date of registration. This means that you will have to buy Republic Services shares before June 30 to receive the dividend, which will be paid on July 15.
The company’s next dividend will be US $ 0.42 per share, and over the past 12 months, the company has paid a total of US $ 1.70 per share. Last year’s total dividend payouts show Republic Services to have a 1.6% return on the current price of $ 108.33. If you are buying this company for its dividend, you should know if the Republic Services dividend is reliable and sustainable. So we need to determine if Republic Services can afford its dividend and if the dividend could increase.
Check out our latest analysis for Republic Services
Dividends are generally paid out of the company’s profits. If a company pays more dividends than it made a profit, then the dividend could be unsustainable. Republic Services paid out 53% of its profits to investors last year, a normal payout level for most companies. Having said that, even very profitable companies can sometimes not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by the cash flow. It distributed 38% of its free cash flow as dividends, a comfortable payout level for most companies.
It is positive to see that the Republic Services dividend is covered by both earnings and cash flow, as this is usually a sign that the dividend is sustainable, and a lower payout ratio usually suggests a larger margin. security before the dividend is cut.
Click here to view the company’s payout ratio, as well as analysts’ estimates of its future dividends.
Have profits and dividends increased?
Stocks of companies that generate sustainable earnings growth often offer the best dividend prospects because it’s easier to raise the dividend when earnings rise. If profits fall enough, the company could be forced to cut its dividend. That’s why it’s a relief to see Republic Services earnings per share grow 8.3% per year over the past five years. While profits have grown at a credible rate, the company is paying the majority of its profits to its shareholders. If management further increases the payout ratio, we will take this as an unspoken signal that the company’s growth prospects are slowing.
Many investors will assess a company’s dividend yield by evaluating how much dividend payments have changed over time. Since our data began 10 years ago, Republic Services has increased its dividend by around 7.8% per year on average. It’s encouraging to see the company raising its dividends as profits rise, suggesting at least some corporate interest in rewarding shareholders.
From a dividend perspective, should investors buy or avoid Republic Services? While earnings per share growth has been modest, Republic Services dividend payouts are around mid-range; without a sharp change in earnings, we think the dividend is probably quite sustainable. Fortunately, the company paid a conservatively small percentage of its free cash flow. Overall, we are not extremely bearish on the stock, but there are probably better dividend investments.
On that note, you’ll want to research the risks Republic Services faces. Every business has risks, and we have spotted 2 warning signs for the services of the Republic you should know.
If you are in the dividend-paying stock market, we recommend that you check out our list of the highest dividend-paying stocks with a yield above 2% and a future dividend.
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