Readers who want to buy Pzena Investment Management, Inc (NYSE: PZN) for its dividend is about to make its move as the stock is about to trade ex dividend. As a rule, the ex-dividend day is one business day before the record date on which a company determines the shareholders who are entitled to dividends. The ex-dividend date is an important date to keep in mind as any purchase of the stock made on or after that date could mean a late settlement that won’t show up on the record date. This means that investors who buy Pzena Investment Management’s shares on or after October 28th will not receive the dividend, which will be paid on November 19th.

The company’s next dividend payment is $ 0.03 per share. Last year, the company paid out a total of $ 0.34 to shareholders. Looking at the distributions over the past 12 months, Pzena Investment Management has a trailing return of approx. 3.1% compared to the current share price of USD 10.88. We love when companies pay dividends, but it’s also important that laying the golden eggs doesn’t kill our golden goose! So we have to check whether the dividend payments are covered and whether earnings are increasing.

Dividends are usually paid out of company profits. So when a company pays out more than it earned, there is usually a higher risk of its dividend being cut. So it’s good to see that Pzena Investment Management pays out a modest 33% of its profits.

Companies that pay less dividends than they generate in profits tend to have more sustainable dividends. The lower the payout ratio, the more leeway the company has before it could be forced to cut its dividend.

Click here to see how much of its earnings Pzena Investment Management has paid out over the past 12 months.

NYSE: PZN Historic Dividend October 23, 2021

Have profits and dividends grown?

Companies with falling profits are riskier for dividend shareholders. Investors love dividends. So if earnings are going down and dividends are going down, expect a stock to sell heavily at the same time. Pzena Investment Management’s earnings per share have declined about 15% per year over the past five years. Such a sharp decline casts doubt on the future sustainability of the dividend.

Another important way to measure a company’s dividend prospects is by measuring its historical dividend growth rate. Pzena Investment Management has achieved an annual dividend increase averaging 11% per year based on dividend payments over the past 10 years.

Last snack

Is Pzena Investment Management an attractive dividend stock or is it better on the shelf? Earnings per share have shrunk noticeably in recent years, although we like the company’s low payout ratio. This could suggest that a dividend cut might not pose a greater risk in the near future. It doesn’t seem like a stellar opportunity, but it might be worth a closer look.

If dividends aren’t your top concern at Pzena Investment Management, you should understand the other risks this business faces. We have identified 2 warning signs with Pzena Investment Management (at least 1 which makes us a little uncomfortable), and understanding these should be part of your investment process.

If you are in the dividend stocks market, we recommend checking out our list of the top dividend stocks with a yield greater than 2% and an upcoming dividend.

This article from Simply Wall St is of a general nature. We only provide comments based on historical data and analyst projections using an unbiased methodology, and our articles are not intended as financial advice. It is not a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our goal is to provide you with long-term, focused analysis based on fundamentals. Note that our analysis may not take into account the latest company announcements or quality material, which may be sensitive to the price. Simply Wall St has no position in the stocks mentioned.

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