Readers hoping to buy Nine Entertainment Co. Holdings Limited (ASX:NEC) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is usually set to be two business days 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 important as the process of settlement involves at least two full business days. So if you miss that date, you would not show up on the company's books on the record date. Meaning, you will need to purchase Nine Entertainment Holdings' shares before the 11th of September to receive the dividend, which will be paid on the 26th of September.

The company's next dividend payment will be AU$0.53 per share, and in the last 12 months, the company paid a total of AU$0.075 per share. Based on the last year's worth of payments, Nine Entertainment Holdings has a trailing yield of 4.4% on the current stock price of AU$1.705. If you buy this business for its dividend, you should have an idea of whether Nine Entertainment Holdings's dividend is reliable and sustainable. As a result, readers should always check whether Nine Entertainment Holdings has been able to grow its dividends, or if the dividend might be cut.

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Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Nine Entertainment Holdings distributed an unsustainably high 114% of its profit as dividends to shareholders last year. Without extenuating circumstances, we'd consider the dividend at risk of a cut. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. It paid out more than half (52%) of its free cash flow in the past year, which is within an average range for most companies.

It's disappointing to see that the dividend was not covered by profits, but cash is more important from a dividend sustainability perspective, and Nine Entertainment Holdings fortunately did generate enough cash to fund its dividend. If executives were to continue paying more in dividends than the company reported in profits, we'd view this as a warning sign. Very few companies are able to sustainably pay dividends larger than their reported earnings.

Story Continues

See our latest analysis for Nine Entertainment Holdings

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.ASX:NEC Historic Dividend September 6th 2025

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That's why it's comforting to see Nine Entertainment Holdings's earnings have been skyrocketing, up 36% per annum for the past five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Nine Entertainment Holdings's dividend payments per share have declined at 1.1% per year on average over the past 10 years, which is uninspiring.

Final Takeaway

Is Nine Entertainment Holdings an attractive dividend stock, or better left on the shelf? Nine Entertainment Holdings has been growing its earnings per share nicely, although judging by the difference between its profit and cashflow payout ratios, the company might have reported some write-offs over the last year. All things considered, we are not particularly enthused about Nine Entertainment Holdings from a dividend perspective.

If you're not too concerned about Nine Entertainment Holdings's ability to pay dividends, you should still be mindful of some of the other risks that this business faces. Case in point: We've spotted 2 warning signs for Nine Entertainment Holdings you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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