Be Sure To Check Out LKQ Corporation (NASDAQ:LKQ) Before It Goes Ex-Dividend

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LKQ Corporation (NASDAQ:LKQ) stock is about to trade ex-dividend in 3 days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Accordingly, LKQ investors that purchase the stock on or after the 14th of November will not receive the dividend, which will be paid on the 27th of November.

The company's upcoming dividend is US$0.30 a share, following on from the last 12 months, when the company distributed a total of US$1.20 per share to shareholders. Based on the last year's worth of payments, LKQ stock has a trailing yield of around 3.1% on the current share price of US$38.37. If you buy this business for its dividend, you should have an idea of whether LKQ's dividend is reliable and sustainable. As a result, readers should always check whether LKQ has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for LKQ

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. That's why it's good to see LKQ paying out a modest 44% of its earnings. A useful secondary check can be to evaluate whether LKQ generated enough free cash flow to afford its dividend. Thankfully its dividend payments took up just 43% of the free cash flow it generated, which is a comfortable payout ratio.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

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

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NasdaqGS:LKQ Historic Dividend November 10th 2024

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Fortunately for readers, LKQ's earnings per share have been growing at 12% a year for the past five years. The company has managed to grow earnings at a rapid rate, while reinvesting most of the profits within the business. Fast-growing businesses that are reinvesting heavily are enticing from a dividend perspective, especially since they can often increase the payout ratio later.

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