Clear Secure, Inc. (NYSE:YOU) is about to trade ex-dividend in the next four days. The ex-dividend date occurs one day before the record date, which is the day on which shareholders need to be on the company's books in order to receive a dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Accordingly, Clear Secure investors that purchase the stock on or after the 10th of March will not receive the dividend, which will be paid on the 18th of March.

The company's upcoming dividend is US$0.395 a share, following on from the last 12 months, when the company distributed a total of US$0.77 per share to shareholders. Based on the last year's worth of payments, Clear Secure has a trailing yield of 3.2% on the current stock price of US$24.17. If you buy this business for its dividend, you should have an idea of whether Clear Secure's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.

See our latest analysis for Clear Secure

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Clear Secure has a low and conservative payout ratio of just 23% of its income after tax. A useful secondary check can be to evaluate whether Clear Secure generated enough free cash flow to afford its dividend. What's good is that dividends were well covered by free cash flow, with the company paying out 14% of its cash flow last year.

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.

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. That's why it's comforting to see Clear Secure's earnings have been skyrocketing, up 108% per annum for the past five years. Clear Secure looks like a real growth company, with earnings per share growing at a cracking pace and the company reinvesting most of its profits in the business.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Clear Secure has delivered 66% dividend growth per year on average over the past two years. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

The Bottom Line

Has Clear Secure got what it takes to maintain its dividend payments? Clear Secure has been growing earnings at a rapid rate, and has a conservatively low payout ratio, implying that it is reinvesting heavily in its business; a sterling combination. Clear Secure looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

On that note, you'll want to research what risks Clear Secure is facing. For example - Clear Secure has 1 warning sign we think you should be aware of.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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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.