Yahoo Finance 2 Days Left Until CAE Inc (TSE:CAE) Trades Ex-Dividend,
Have you been keeping an eye on CAE Inc’s (TSE:CAE) upcoming dividend of CA$0.10 per share payable on the 28 September 2018? Then you only have 2 days left before the stock starts trading ex-dividend on the 13 September 2018. What does this mean for current shareholders and potential investors? Below, I will explain how holding CAE can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes.
View our latest analysis for CAE
How I analyze a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
Is its annual yield among the top 25% of dividend-paying companies?
Does it consistently pay out dividends without missing a payment of significantly cutting payout?
Has dividend per share amount increased over the past?
Is its earnings sufficient to payout dividend at the current rate?
Will it have the ability to keep paying its dividends going forward?
How does CAE fare?
CAE has a trailing twelve-month payout ratio of 27.0%, which means that the dividend is covered by earnings. Going forward, analysts expect CAE’s payout to increase to 31.2% of its earnings, which leads to a dividend yield of around 1.6%. However, EPS is forecasted to fall to CA$1.27 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.
Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. In the case of CAE it has increased its DPS from CA$0.12 to CA$0.40 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock.
Compared to its peers, CAE produces a yield of 1.5%, which is on the low-side for Aerospace & Defense stocks.
Next Steps:
Keeping in mind the dividend characteristics above, CAE is definitely worth considering for investors looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. I’ve put together three pertinent factors you should further examine:
Future Outlook: What are well-informed industry analysts predicting for CAE’s future growth? Take a look at our free research report of analyst consensus for CAE’s outlook.
Valuation: What is CAE worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether CAE is currently mispriced by the market.
Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
