Warner Music Group Corp. (NASDAQ:WMG) Is About To Go Ex-Dividend, And It Pays A 2.1% Yield

Warner Music Group Corp. (NASDAQ:WMG) is about to commerce ex-dividend within the subsequent three days. The ex-dividend date is often set to be one enterprise day earlier than the report date which is the closing date on which you have to be current on the corporate’s books as a shareholder in an effort to obtain the dividend. You will need to concentrate on the ex-dividend date as a result of any commerce on the inventory must have been settled on or earlier than the report date. Accordingly, Warner Music Group buyers that buy the inventory on or after the twenty third of August is not going to obtain the dividend, which might be paid on the first of September.

The corporate’s subsequent dividend cost might be US$0.16 per share, on the again of final 12 months when the corporate paid a complete of US$0.60 to shareholders. Primarily based on the final 12 months’s value of funds, Warner Music Group inventory has a trailing yield of round 2.1% on the present share worth of $29.26. We love seeing firms pay a dividend, however it’s additionally vital to ensure that laying the golden eggs is not going to kill our golden goose! That is why we must always at all times examine whether or not the dividend funds seem sustainable, and if the corporate is rising.

See our newest evaluation for Warner Music Group

Dividends are sometimes paid from firm earnings. If an organization pays extra in dividends than it earned in revenue, then the dividend may very well be unsustainable. Warner Music Group paid out 72% of its earnings to buyers final 12 months, a traditional payout degree for many companies. But money move is often extra vital than revenue for assessing dividend sustainability, so we must always at all times examine if the corporate generated sufficient money to afford its dividend. Over the previous 12 months it paid out 135% of its free money move as dividends, which is uncomfortably excessive. We’re interested by why the corporate paid out more money than it generated final 12 months, since this may be one of many early indicators {that a} dividend could also be unsustainable.

Warner Music Group paid out much less in dividends than it reported in earnings, however sadly it did not generate sufficient money to cowl the dividend. Money is king, as they are saying, and had been Warner Music Group to repeatedly pay dividends that are not effectively lined by cashflow, we’d think about this a warning signal.

Click on right here to see the corporate’s payout ratio, plus analyst estimates of its future dividends.

historic-dividend

Have Earnings And Dividends Been Rising?

Shares in firms that generate sustainable earnings development usually make the most effective dividend prospects, as it’s simpler to carry the dividend when earnings are rising. If earnings fall far sufficient, the corporate may very well be compelled to chop its dividend. Fortuitously for readers, Warner Music Group’s earnings per share have been rising at 11% a 12 months for the previous 5 years. Earnings have been rising at an honest price, however we’re involved dividend funds consumed a lot of the firm’s money move over the previous 12 months.

One other key solution to measure an organization’s dividend prospects is by measuring its historic price of dividend development. Up to now two years, Warner Music Group has elevated its dividend at roughly 12% a 12 months on common. Each per-share earnings and dividends have each been rising quickly in current occasions, which is nice to see.

To Sum It Up

Ought to buyers purchase Warner Music Group for the upcoming dividend? It is good to see that earnings per share are rising and that the corporate’s payout ratio is inside a traditional vary for many companies. Nevertheless we’re considerably involved that it paid out 135% of its cashflow, which is uncomfortably excessive. To summarise, Warner Music Group appears okay on this evaluation, though it would not seem a stand-out alternative.

So if you wish to do extra digging on Warner Music Group, you may discover it worthwhile realizing the dangers that this inventory faces. Each firm has dangers, and we have noticed 2 warning indicators for Warner Music Group (of which 1 is critical!) it’s best to find out about.

Should you’re available in the market for robust dividend payers, we advocate checking our choice of high dividend shares.

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This text by Merely Wall St is basic in nature. We offer commentary primarily based on historic knowledge and analyst forecasts solely utilizing an unbiased methodology and our articles should not supposed to be monetary recommendation. It doesn’t represent a advice to purchase or promote any inventory, and doesn’t take account of your goals, or your monetary scenario. We purpose to convey you long-term centered evaluation pushed by basic knowledge. Word that our evaluation could not issue within the newest price-sensitive firm bulletins or qualitative materials. Merely Wall St has no place in any shares talked about.

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