It looks like MarketAxess Holdings Inc. (NASDAQ:MKTX) will go ex-dividend in the next 2 days. The ex-dividend date is one business day before a company’s record date, when the company determines which shareholders are entitled to a dividend. It is important to know the ex-dividend date because any trade in the stock must have occurred on or before the record date. This means you would have to purchase MarketAxess Holdings shares before August 12th to receive the dividend, which will be paid on September 4th.
The company’s next dividend payment will be $0.74 per share. Over the last 12 months, the company paid a total of $2.96 per share. Last year’s total dividend payments show that MarketAxess Holdings has a yield of 1.3% on the current share price of $231.89. If you are buying this company for its dividend, you should have an idea of whether MarketAxess Holdings’ dividend is reliable and sustainable. We need to see if the dividend is covered by earnings and if it is growing.
Check out our latest analysis for MarketAxess Holdings
Dividends are typically paid out of company profits, so if a company pays out more than it earns, there is usually a higher risk of a dividend cut. Fortunately, MarketAxess Holdings’ payout ratio is modest at just 42% of profits.
If a company pays out less in dividends than it makes in profit, it generally indicates that its dividend is affordable. The lower the percentage of profit it pays out, the greater the margin of safety for the dividend if the company enters a recession.
Click here to see the company’s payout ratio as well as analyst estimates of its future dividends.
Have earnings and dividends increased?
Stocks in companies that generate sustainable earnings growth often have the best dividend prospects, as it is easier to increase the dividend when earnings are rising. If the business goes into crisis and the dividend is cut, the value of the company could fall sharply. With that in mind, we are encouraged by the steady growth at MarketAxess Holdings, which has seen earnings per share grow by an average of 8.2% over the past five years.
Another important way to gauge a company’s dividend prospects is to measure its historical dividend growth rate. Since we began our data 10 years ago, MarketAxess Holdings has increased its dividend by an average of about 19% per year. It’s encouraging to see the company increasing its dividends while earnings are growing, suggesting at least some interest from the company in rewarding its shareholders.
The conclusion
Does MarketAxess Holdings have what it takes to maintain its dividend payments? Over the past few years, the company has managed to grow its earnings per share somewhat, despite reinvesting more than half of its profits into the business, which could indicate that there are some growth projects that have not yet come to fruition. We think this is quite an attractive combination and would like to take a closer look at MarketAxess Holdings.
Curious what other investors think about MarketAxess Holdings? See what analysts are forecasting with this visualization of historical and future estimated earnings and cash flows.
If you are looking for strong dividend payers, we recommend Check out our selection of the highest dividend stocks.
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This Simply Wall St article is of a general nature. We comment solely on the basis of historical data and analyst forecasts, using an unbiased methodology. Our articles do not constitute financial advice. It is not a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. Our goal is to provide you with long-term analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative materials. Simply Wall St does not hold any of the stocks mentioned.