AXIS Capital Holdings Limited’s (NYSE:AXS) investors are due to receive a payment of $0.44 per share on 15th of January. Based on this payment, the dividend yield will be 1.8%, which is fairly typical for the industry.
AXIS Capital Holdings’ Future Dividend Projections Appear Well Covered By Earnings
Solid dividend yields are great, but they only really help us if the payment is sustainable. Based on the last payment, AXIS Capital Holdings was earning enough to cover the dividend, but free cash flows weren’t positive. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.
Over the next year, EPS is forecast to expand by 27.3%. Assuming the dividend continues along recent trends, we think the payout ratio could be 11% by next year, which is in a pretty sustainable range.
AXIS Capital Holdings Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. The annual payment during the last 10 years was $1.16 in 2015, and the most recent fiscal year payment was $1.76. This means that it has been growing its distributions at 4.3% per annum over that time. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.
The Dividend Looks Likely To Grow
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. AXIS Capital Holdings has impressed us by growing EPS at 36% per year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.
Our Thoughts On AXIS Capital Holdings’ Dividend
Overall, we don’t think this company makes a great dividend stock, even though the dividend wasn’t cut this year. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. We would probably look elsewhere for an income investment.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we’ve picked out 1 warning sign for AXIS Capital Holdings that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.