AECOM (NYSE:ACM) stock is set to trade ex-dividend in three days. The ex-dividend date is typically one business day before the record date, which is the deadline to be listed as a shareholder on the company’s books to receive the dividend. If you buy AECOM shares on or after July 3rd, you won’t be eligible for the upcoming dividend of US$0.22 per share, scheduled to be paid on July 19th.
In the past 12 months, AECOM distributed a total of US$0.88 per share, resulting in a trailing yield of around 1.0% based on the current share price of US$88.14. Dividends play a significant role in long-term investment returns, but it’s crucial to assess whether AECOM can sustain and potentially grow its dividend.
AECOM paid out 94% of its earnings as dividends, which may raise concerns about sustainability. However, the company only utilized 15% of its free cash flow for dividends in the last year, indicating a more secure financial position in terms of cash availability.
While AECOM’s dividends were not well covered by profits, they appear feasible from a cash perspective. Nonetheless, if the company continues to pay out a high percentage of its profits, the dividend could be at risk during challenging business conditions.
Earnings per share for AECOM have declined by 7.0% annually over the past five years, impacting the potential for dividend growth. Despite increasing its dividend by approximately 14% annually over the last three years, sustaining higher payouts without earnings growth may be challenging for the company.
Considering the concerns regarding earnings decline and high payout ratio, investors may want to approach AECOM cautiously as an attractive dividend stock. It’s essential to be mindful of the risks associated with the company, including potential issues in cash flows or asset write-downs affecting income.
In conclusion, AECOM’s dividend characteristics raise red flags, suggesting a cautious approach for investors. For those interested in dividend stocks, thorough research and evaluation of risks are crucial before making investment decisions.