Why you might be interested in eXp World Holdings, Inc. (NASDAQ:EXPI) for its upcoming dividend

Looks like eXp World Holdings, Inc. (NASDAQ: EXPI) is set to go ex-dividend in the next four days. Generally, the ex-dividend date is one business day before the record date which is the date a company determines which shareholders are eligible to receive a dividend. The ex-dividend date is important because any stock transaction must have settled before the record date to be eligible for a dividend. So, you can buy shares of eXp World Holdings before November 10 in order to receive the dividend, which the company will pay on November 28.

The company’s next dividend payout will be $0.045 per share, following last year when the company paid a total of $0.18 to shareholders. Looking at the last 12 months of distributions, eXp World Holdings has a yield of about 1.6% on its current share price of $11.3. If you’re buying this company for its dividend, you should have some idea of ​​the reliability and sustainability of eXp World Holdings’ dividend. Therefore, readers should always check whether eXp World Holdings was able to increase its dividend or if the dividend could be reduced.

Check out our latest analysis for eXp World Holdings

Dividends are usually paid out of company profits. If a company pays out more dividends than it earns in profits, then the dividend could be unsustainable. eXp World Holdings only pays out 16% of its after-tax profit, which is comfortably low and leaves plenty of room for adverse events. Still, cash flow is usually more important than earnings in assessing the sustainability of dividends, so we always need to check whether the company has generated enough cash to pay its dividend. The good news is that it has only paid out 11% of its free cash flow over the past year.

It is positive to see that eXp World Holdings’ dividend is covered by both earnings and cash flow, as this is generally a sign that the dividend is sustainable, and a lower payout ratio generally suggests a higher large margin of safety before the dividend is cut.

Click on here to see the company’s payout ratio, as well as analysts’ estimates of its future dividends.

NasdaqGM:EXPI Historic Dividend November 5, 2022

Have earnings and dividends increased?

Stocks of companies that generate sustainable earnings growth often offer the best dividend prospects because it is easier to increase the dividend when earnings increase. If earnings fall and the company is forced to cut its dividend, investors could see the value of their investment go up in smoke. That’s why it’s heartening to see eXp World Holdings’ profits skyrocketing, up 68% annually over the past five years. eXp World Holdings looks like a true growth company, with earnings per share growing at a breakneck pace and the company reinvesting most of its profits back into the business.

Unfortunately, eXp World Holdings has only been paying a dividend for about a year, so there’s not much story to tell.

Last takeaway

Is eXp World Holdings worth buying for its dividend? eXp World Holdings has been growing its earnings at a rapid pace and has a moderately low payout ratio, implying that it is reinvesting heavily in its business; a perfect combination. Overall, we think this is an attractive combination worthy of further research.

In light of this, while eXp World Holdings has an attractive dividend, it is worth knowing the risks associated with this stock. For example, we found 3 warning signs for eXp World Holdings which we recommend you consider before investing in the company.

If you are looking for strong dividend payers, we recommend by consulting our selection of the best dividend-paying stocks.

Valuation is complex, but we help make it simple.

Find out if eXp World Holdings is potentially overvalued or undervalued by viewing our full analysis, which includes fair value estimates, risks and warnings, dividends, insider trading and financial health.

See the free analysis

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.