It Might Not Be A Great Idea To Buy American Eagle Outfitters, Inc. (NYSE:AEO) For Its Next Dividend

Simply Wall St
·3 min read

It looks like American Eagle Outfitters, Inc. (NYSE:AEO) is about to go ex-dividend in the next three days. This means that investors who purchase shares on or after the 11th of March will not receive the dividend, which will be paid on the 26th of March.

American Eagle Outfitters's next dividend payment will be US$0.14 per share, and in the last 12 months, the company paid a total of US$0.55 per share. Based on the last year's worth of payments, American Eagle Outfitters has a trailing yield of 1.9% on the current stock price of $28.54. 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! We need to see whether the dividend is covered by earnings and if it's growing.

Check out our latest analysis for American Eagle Outfitters

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. American Eagle Outfitters reported a loss last year, so it's not great to see that it has continued paying a dividend.

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

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Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. American Eagle Outfitters reported a loss last year, and the general trend suggests its earnings have also been declining in recent years, making us wonder if the dividend is at risk.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last 10 years, American Eagle Outfitters has lifted its dividend by approximately 2.3% a year on average.

Get our latest analysis on American Eagle Outfitters's balance sheet health here.

Final Takeaway

From a dividend perspective, should investors buy or avoid American Eagle Outfitters? 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.

With that being said, if you're still considering American Eagle Outfitters as an investment, you'll find it beneficial to know what risks this stock is facing. For example - American Eagle Outfitters has 2 warning signs we think you should be aware of.

If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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