We Wouldn't Be Too Quick To Buy Blackstone Inc. (NYSE:BX) Before It Goes Ex-Dividend

Blackstone Group L.P. 0.00% Pre

Blackstone Group L.P.

BX

123.64

123.49

0.00%

-0.12% Pre

Readers hoping to buy Blackstone Inc. (NYSE:BX) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible 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. Thus, you can purchase Blackstone's shares before the 2nd of February in order to receive the dividend, which the company will pay on the 12th of February.

The company's next dividend payment will be US$0.94 per share, and in the last 12 months, the company paid a total of US$3.35 per share. Based on the last year's worth of payments, Blackstone stock has a trailing yield of around 2.6% on the current share price of US$127.83. 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! That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

See our latest analysis for Blackstone

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Blackstone distributed an unsustainably high 182% of its profit as dividends to shareholders last year. Without more sustainable payment behaviour, the dividend looks precarious.

When a company pays out a dividend that is not well covered by profits, the dividend is generally seen as more vulnerable to being cut.

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

historic-dividend
NYSE:BX Historic Dividend January 30th 2024

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If earnings fall far enough, the company could be forced to cut its dividend. So we're not too excited that Blackstone's earnings are down 3.2% a year over the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Blackstone has delivered an average of 17% per year annual increase in its dividend, based on the past 10 years of dividend payments. That's intriguing, but the combination of growing dividends despite declining earnings can typically only be achieved by paying out a larger percentage of profits. Blackstone is already paying out a high percentage of its income, so without earnings growth, we're doubtful of whether this dividend will grow much in the future.

The Bottom Line

Is Blackstone worth buying for its dividend? Earnings per share are in decline and Blackstone is paying out what we feel is an uncomfortably high percentage of its profit as dividends. Generally we think dividend investors should avoid businesses in this situation, as high payout ratios and declining earnings can lead to the dividend being cut. These characteristics don't generally lead to outstanding dividend performance, and investors may not be happy with the results of owning this stock for its dividend.

So if you're still interested in Blackstone despite it's poor dividend qualities, you should be well informed on some of the risks facing this stock. Be aware that Blackstone is showing 3 warning signs in our investment analysis, and 1 of those doesn't sit too well with us...

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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