Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Cohen & Steers, Inc. (NYSE:CNS) is about to trade ex-dividend in the next 3 days.  The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend.  The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend.   This means that investors who purchase Cohen & Steers' shares on or after the 10th of May will not receive the dividend, which will be paid on the 23rd of May.  

The company's next dividend payment will be US$0.59 per share, and in the last 12 months, the company paid a total of US$2.36 per share.  Last year's total dividend payments show that Cohen & Steers has a trailing yield of 3.3% on the current share price of US$70.57.    We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose!  We need to see whether the dividend is covered by earnings and if it's growing.

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut.   Its dividend payout ratio is 89% of profit, which means the company is paying out a majority of its earnings. The relatively limited profit reinvestment could slow the rate of future earnings growth.  We'd be concerned if earnings began to decline.  

When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

NYSE:CNS Historic Dividend May 6th 2024

Have Earnings And Dividends Been Growing?

Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow.   If business enters a downturn and the dividend is cut, the company could see its value fall precipitously.     It's not encouraging to see that Cohen & Steers's earnings are effectively flat over the past five years.  It's better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share.    

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth.     Cohen & Steers's dividend payments are broadly unchanged compared to where they were 10 years ago.    

Final Takeaway

Has Cohen & Steers got what it takes to maintain its dividend payments?      Cohen & Steers's earnings are effectively flat over recent years, even as the company pays out more than half of its earnings to shareholders as dividends.        In sum this is a middling combination, and we find it hard to get excited about the company from a dividend perspective.  

If you're not too concerned about Cohen & Steers's ability to pay dividends, you should still be mindful of some of the other risks that this business faces.     In terms of investment risks, we've identified 3 warning signs with Cohen & Steers and understanding them should be part of your investment process.  

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.