Assessing the Sustainability of Enact Holdings Inc's Upcoming Dividend
Enact Holdings Inc (ACT, Financial) recently announced a dividend of $0.16 per share, payable on 2024-03-13, with the ex-dividend date set for 2024-02-27. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Enact Holdings Inc's dividend performance and assess its sustainability.
What Does Enact Holdings Inc Do?
Enact Holdings Inc is a private mortgage insurance company serving the United States housing finance market. The company is engaged in the business of writing and assuming residential mortgage guaranty insurance. Its product offerings include Primary mortgage insurance, which provides protection on individual loans at specified coverage percentages. Primary mortgage insurance is placed on individual loans at the time of origination and is typically delivered to the company on a loan-by-loan basis, and Pool mortgage insurance provides coverage on a finite set of individual loans identified by the pool policy.
A Glimpse at Enact Holdings Inc's Dividend History
Enact Holdings Inc has maintained a consistent dividend payment record since 2021. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Enact Holdings Inc's Dividend Yield and Growth
As of today, Enact Holdings Inc currently has a 12-month trailing dividend yield of 2.30% and a 12-month forward dividend yield of 2.38%. This suggests an expectation of increased dividend payments over the next 12 months.
Based on Enact Holdings Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Enact Holdings Inc stock as of today is approximately 2.30%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-12-31, Enact Holdings Inc's dividend payout ratio is 0.15.
Enact Holdings Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Enact Holdings Inc's profitability 4 out of 10 as of 2023-12-31, suggesting the dividend may not be sustainable. The company has reported net profit in 4 years out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Enact Holdings Inc's growth rank of 4 out of 10 suggests that the company has poor growth prospects and thus, the dividend may not be sustainable.
Revenue is the lifeblood of any company, and Enact Holdings Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Enact Holdings Inc's revenue has increased by approximately 3.70% per year on average, a rate that underperforms approximately 55.6% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Enact Holdings Inc's earnings increased by approximately 1.20% per year on average, a rate that underperforms approximately 55.29% of global competitors.
Next Steps
In conclusion, while Enact Holdings Inc's dividend history reflects a pattern of consistent payments, the company's modest profitability and growth metrics raise questions about the long-term sustainability of its dividends. The low payout ratio is a positive indicator, suggesting room for the company to maneuver financially. However, the growth rank and comparative performance against global peers suggest that Enact Holdings Inc may face challenges in maintaining its dividend growth. Investors should keep a close eye on the company's future earnings reports and strategic initiatives to better gauge the viability of its dividend program. For those seeking high-dividend yield opportunities, GuruFocus Premium users can screen for such stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
