Yahoo Finance Badger Daylighting Ltd. (TSE:BAD)'s Could Be A Buy For Its Upcoming Dividend
Badger Daylighting Ltd. (TSE:BAD) is about to trade ex-dividend in the next 4 days. You will need to purchase shares before the 30th of July to receive the dividend, which will be paid on the 15th of August.
Badger Daylighting's next dividend payment will be CA$0.048 per share, on the back of last year when the company paid a total of CA$0.57 to shareholders. Based on the last year's worth of payments, Badger Daylighting stock has a trailing yield of around 1.2% on the current share price of CA$48.96. If you buy this business for its dividend, you should have an idea of whether Badger Daylighting's dividend is reliable and sustainable. As a result, readers should always check whether Badger Daylighting has been able to grow its dividends, or if the dividend might be cut.
See our latest analysis for Badger Daylighting
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. That's why it's good to see Badger Daylighting paying out a modest 30% of its earnings. A useful secondary check can be to evaluate whether Badger Daylighting generated enough free cash flow to afford its dividend. It distributed 49% of its free cash flow as dividends, a comfortable payout level for most companies.
It's positive to see that Badger Daylighting's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.
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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. For this reason, we're glad to see Badger Daylighting's earnings per share have risen 10% per annum over the last five years. Earnings per share are growing rapidly and the company is keeping more than half of its earnings within the business; an attractive combination which could suggest the company is focused on reinvesting to grow earnings further. Fast-growing businesses that are reinvesting heavily are enticing from a dividend perspective, especially since they can often increase the payout ratio later.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Badger Daylighting has delivered an average of 3.1% per year annual increase in its dividend, based on the past 10 years of dividend payments. Earnings per share have been growing much quicker than dividends, potentially because Badger Daylighting is keeping back more of its profits to grow the business.
To Sum It Up
Is Badger Daylighting worth buying for its dividend? It's great that Badger Daylighting is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. It's disappointing to see the dividend has been cut at least once in the past, but as things stand now, the low payout ratio suggests a conservative approach to dividends, which we like. Badger Daylighting looks solid on this analysis overall, and we'd definitely consider investigating it more closely.
Ever wonder what the future holds for Badger Daylighting? See what the seven analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow
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.
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.
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. Thank you for reading.
