Insperity, Inc. (NYSE: NSP) looks interesting, and it’s about to pay a dividend
It looks like Insperity, Inc. (NYSE: NSP) is set to be ex-dividend within the next four days. The ex-dividend date is one working day before the registration date, which is the deadline by which shareholders must be present on the books of the company to be eligible for the payment of a dividend. The ex-dividend date is important because any share transaction must have been settled before the registration date to be eligible for a dividend. This means that you will need to buy shares of Insperity by December 3 to receive the dividend, which will be paid on December 20.
The upcoming dividend for Insperity will put a total of US $ 2.45 per share in the pockets of shareholders, up from the total dividend of US $ 1.80 last year. We love to see companies pay a dividend, but it’s also important to be sure that laying the golden eggs is not going to kill our goose that lays the golden eggs! Accordingly, readers should always check whether Insperity has been able to increase its dividends or if the dividend could be reduced.
Check out our latest analysis for Insperity
Dividends are generally paid out of company profits. If a company pays more dividends than it made a profit, then the dividend could be unsustainable. Insperity pays an acceptable level of 55% of its profits, a payment level common to most businesses. Having said that, even very profitable companies can sometimes not generate enough cash to pay the dividend, which is why we always need to check if the dividend is covered by the cash flow. Fortunately, she has only paid out 27% of her free cash flow in the past year.
It is encouraging to see that the dividend is covered by both earnings and cash flow. This usually suggests that the dividend is sustainable, as long as profits don’t drop sharply.
Click here to view the company’s payout ratio, as well as analysts’ estimates of its future dividends.
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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold massively at the same time. That’s why it’s heartwarming to see Insperity’s revenue skyrocket, up 31% per year over the past five years. Management seems to strike a good balance between reinvesting for growth and paying dividends to shareholders. Earnings per share have grown rapidly, and in combination with some reinvestment and an average payout ratio, the stock may have decent dividend prospects going forward.
Most investors will primarily assess a company’s dividend prospects by checking the historical rate of dividend growth. Over the past 10 years, Insperity has increased its dividend by around 20% per year on average. It’s great to see earnings per share increasing rapidly over several years, and dividends per share increasing at the same time.
Is Insperity an attractive dividend-paying stock, or rather left on the shelf? Insperity’s growing earnings per share and conservative payout ratios are a decent combination. We also like the fact that it pays a lower percentage of its cash flow. There’s a lot to love about Insperity, and we’d prioritize taking a closer look.
With this in mind, an essential part of in-depth stock research is being aware of the risks stocks currently face. Our analysis shows 1 warning sign for Insperity and you need to be aware of this before you buy any stocks.
However, we don’t recommend simply buying the first dividend stock you see. Here is a list of interesting dividend paying stocks with a yield above 2% and a dividend coming soon.
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 the mentioned stocks.
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