Yahoo Finance Castings' (LON:CGS) Upcoming Dividend Will Be Larger Than Last Year's
Castings P.L.C.'s (LON:CGS) dividend will be increasing from last year's payment of the same period to £0.1419 on 23rd of August. Based on this payment, the dividend yield for the company will be 7.0%, which is fairly typical for the industry.
See our latest analysis for Castings
Castings' Earnings Easily Cover The Distributions
Unless the payments are sustainable, the dividend yield doesn't mean too much. Prior to this announcement, Castings' dividend was only 48% of earnings, however it was paying out 99% of free cash flows. This signals that the company is more focused on returning cash flow to shareholders, but it could mean that the dividend is exposed to cuts in the future.
Over the next year, EPS is forecast to fall by 18.3%. If recent patterns in the dividend continue, we could see the payout ratio reaching 83% in the next 12 months, which is on the higher end of the range we would say is sustainable.
Castings Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2014, the dividend has gone from £0.13 total annually to £0.253. This works out to be a compound annual growth rate (CAGR) of approximately 6.9% a year over that time. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.
Castings Could Grow Its Dividend
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Castings has impressed us by growing EPS at 8.8% per year over the past five years. The company is paying out a lot of its cash as a dividend, but it looks okay based on the payout ratio.
Our Thoughts On Castings' Dividend
Overall, we always like to see the dividend being raised, but we don't think Castings will make a great income stock. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. We don't think Castings is a great stock to add to your portfolio if income is your focus.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Just as an example, we've come across 2 warning signs for Castings you should be aware of, and 1 of them makes us a bit uncomfortable. Is Castings not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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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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