Erie Indemnity Company (NASDAQ: ERIE) is set to trade ex-dividend within the next three days. The ex-dividend date is generally set at one working day before the registration date which is the deadline by which you must be present in the books of the company as a shareholder to receive the dividend. The ex-dividend date is important because every time a stock is bought or sold, the transaction takes at least two business days to settle. In other words, investors can buy Erie Indemnity shares before October 4 in order to be eligible for the dividend, which will be paid on October 20.
The company’s upcoming dividend is US $ 1.04 per share, continuing the past 12 months when the company distributed a total of US $ 4.14 per share to shareholders. Last year’s total dividend payouts show that Erie Indemnity has a 2.3% return on the current share price of $ 177.79. Dividends are a major contributor to returns on investment for long-term holders, but only if the dividend continues to be paid. It is therefore necessary to check whether dividend payments are covered and whether profits are growing.
Check out our latest review for Erie Indemnity
Dividends are usually paid out of the company’s profits, so if a company pays more than it earned, its dividend is usually at risk of being reduced. Erie Indemnity paid out 70% of its profits to investors last year, a normal payout level for most companies.
Generally speaking, the lower a company’s payout ratios, the more resilient its dividend.
Click here to see how much of its benefits Erie Indemnity has paid in the past 12 months.
Have profits and dividends increased?
Companies with strong growth prospects generally make the best dividend payers because dividends are easier to grow when earnings per share improve. If business goes into recession and the dividend is reduced, the company could experience a sharp drop in value. Luckily for readers, Erie Indemnity’s earnings per share have grown 15% per year over the past five years.
Another key way to measure a company’s dividend outlook is to measure its historical rate of dividend growth. Since our data began 10 years ago, Erie Indemnity has increased its dividend by around 8.0% per year on average. We are happy to see dividends growing alongside earnings over multiple years, which may be a sign that the company intends to share the growth with its shareholders.
From a dividend perspective, should investors buy or avoid Erie Indemnity? Erie Indemnity has an acceptable payout ratio and its earnings per share are improving at a decent rate. We think this is a pretty appealing combination and would be interested in investigating Erie Indemnity more closely.
Curious whether Erie Indemnity has been able to generate growth on a consistent basis? Here is a graph of the historical growth of its revenue and profits.
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.
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in any of the stocks mentioned.
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