Yahoo Finance Do These 3 Checks Before Buying Molson Coors Canada Inc. (TSE:TPX.B) For Its Upcoming Dividend
Readers hoping to buy Molson Coors Canada Inc. (TSE:TPX.B) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. Ex-dividend means that investors that purchase the stock on or after the 6th of March will not receive this dividend, which will be paid on the 20th of March.
Molson Coors Canada's next dividend payment will be CA$0.76 per share, and in the last 12 months, the company paid a total of CA$2.25 per share. Last year's total dividend payments show that Molson Coors Canada has a trailing yield of 4.4% on the current share price of CA$68.5. 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.
See our latest analysis for Molson Coors Canada
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. Molson Coors Canada paid a dividend last year despite being unprofitable. This might be a one-off event, but it's not a sustainable state of affairs in the long run. Considering the lack of profitability, we also need to check if the company generated enough cash flow to cover the dividend payment. If Molson Coors Canada didn't generate enough cash to pay the dividend, then it must have either paid from cash in the bank or by borrowing money, neither of which is sustainable in the long term. It paid out more than half (69%) of its free cash flow in the past year, which is within an average range for most companies.
Click here to see how much of its profit Molson Coors Canada paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Businesses with shrinking earnings are tricky from a dividend perspective. If earnings fall far enough, the company could be forced to cut its dividend. Molson Coors Canada 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.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last six years, Molson Coors Canada has lifted its dividend by approximately 7.3% a year on average.
We update our analysis on Molson Coors Canada every 24 hours, so you can always get the latest insights on its financial health, here.
To Sum It Up
Is Molson Coors Canada worth buying for its dividend? First, it's not great to see the company paying a dividend despite being loss-making over the last year. On the plus side, the dividend was covered by free cash flow." Overall it doesn't look like the most suitable dividend stock for a long-term buy and hold investor.
Curious about whether Molson Coors Canada has been able to consistently generate growth? Here's a chart of its historical revenue and earnings growth.
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
