Yahoo Finance Pet Valu Holdings Ltd. (TSE:PET) Is About To Go Ex-Dividend, And It Pays A 1.2% Yield
Pet Valu Holdings Ltd. (TSE:PET) stock is about to trade ex-dividend in 4 days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. 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, Pet Valu Holdings investors that purchase the stock on or after the 30th of May will not receive the dividend, which will be paid on the 15th of June.
The company's next dividend payment will be CA$0.10 per share. Last year, in total, the company distributed CA$0.40 to shareholders. Looking at the last 12 months of distributions, Pet Valu Holdings has a trailing yield of approximately 1.2% on its current stock price of CA$33.57. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to check whether the dividend payments are covered, and if earnings are growing.
See our latest analysis for Pet Valu Holdings
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. Pet Valu Holdings has a low and conservative payout ratio of just 20% of its income after tax. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. Luckily it paid out just 24% of its free cash flow last year.
It's positive to see that Pet Valu Holdings'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?
When earnings decline, dividend companies become much harder to analyse and own safely. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. As a result, it's definitely disappointing to see that earnings per share have declined 13% over the past year.
Given that Pet Valu Holdings has only been paying a dividend for a year, there's not much of a past history to draw insight from.
To Sum It Up
Has Pet Valu Holdings got what it takes to maintain its dividend payments? Pet Valu Holdings has comfortably low cash and profit payout ratios, which may mean the dividend is sustainable even in the face of a sharp decline in earnings per share. Still, we consider declining earnings to be a warning sign. Overall, it's hard to get excited about Pet Valu Holdings from a dividend perspective.
In light of that, while Pet Valu Holdings has an appealing dividend, it's worth knowing the risks involved with this stock. In terms of investment risks, we've identified 3 warning signs with Pet Valu Holdings and understanding them should be part of your investment process.
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.
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