Looks like International Northern Technology Society (NASDAQ:NTIC) is set to go ex-dividend in the next 4 days. The ex-dividend date is usually one business day before the record date which is the latest date by which you must be present on the books of the company as a shareholder in order to receive the dividend. The ex-dividend date is important because each time a stock is bought or sold, the transaction takes at least two business days to settle. This means that you will need to buy Northern Technologies International shares by February 1 to receive the dividend, which will be paid on February 16.
The company’s next dividend payment will be $0.07 per share. Last year, in total, the company distributed US$0.28 to shareholders. Based on last year’s payouts, Northern Technologies International has a 2.1% yield on the current stock price of $13.09. Dividends are an important source of income for many shareholders, but the health of the company is essential to sustaining those dividends. We therefore need to check whether dividend payments are covered and whether profits are increasing.
See our latest analysis for Northern Technologies International
Dividends are usually paid out of company profits, so if a company pays out more than it has earned, its dividend is usually at risk of being reduced. Northern Technologies International paid out a comfortable 25% of its profits last year. A useful secondary check may be to assess whether Northern Technologies International has generated sufficient free cash flow to pay its dividend.
Click here to see how much of its profits Northern Technologies International has paid out over the past 12 months.
Have earnings and dividends increased?
Companies with strong growth prospects are generally the best dividend payers because it is easier to increase dividends when earnings per share improve. If business goes into a recession and the dividend is cut, the company could see its value drop precipitously. With this in mind, we are encouraged by the continued growth of Northern Technologies International, with earnings per share increasing by an average of 6.0% over the past five years.
Another key way to gauge a company’s dividend outlook is to measure its historical rate of dividend growth. Northern Technologies International has achieved an average annual increase of 8.8% per year in its dividend, based on dividend payouts for the past four years. We are pleased to see dividends increasing alongside earnings over several years, which may be a sign that the company intends to share the growth with shareholders.
Is Northern Technologies International worth buying for its dividend? Northern Technologies International has seen its earnings per share grow steadily and has paid out less than half of its earnings over the past year. Unfortunately, its dividend was not well covered by free cash flow. In summary, despite some positive characteristics, we are not inclined to rush to buy Northern Technologies International today.
So, if you want to dig deeper into Northern Technologies International, you will find it useful to know the risks this stock faces. Our analysis shows 3 warning signs for Northern Technologies International and you should know them before you buy shares.
If you’re looking for dividend-paying stocks, we recommend checking out our list of the best dividend-paying stocks with a yield above 2% and an upcoming dividend.
Feedback on this article? Concerned about content? Get in touch with us directly. You can also email the editorial team (at) Simplywallst.com.
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.