Yahoo Finance Is It Smart To Buy Orca Exploration Group Inc. (CVE:ORC.B) Before It Goes Ex-Dividend?
Orca Exploration Group Inc. (CVE:ORC.B) is about to trade ex-dividend in the next 3 days. Investors can purchase shares before the 30th of March in order to be eligible for this dividend, which will be paid on the 30th of April.
Orca Exploration Group's next dividend payment will be CA$0.06 per share, and in the last 12 months, the company paid a total of CA$0.18 per share. Based on the last year's worth of payments, Orca Exploration Group stock has a trailing yield of around 5.2% on the current share price of CA$4.58. 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! That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
See our latest analysis for Orca Exploration Group
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. That's why it's good to see Orca Exploration Group paying out a modest 30% of its earnings. 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 10% of its free cash flow last year.
It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
Click here to see how much of its profit Orca Exploration Group paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That's why it's comforting to see Orca Exploration Group's earnings have been skyrocketing, up 68% per annum for the past five years. Orca Exploration Group is paying out less than half its earnings and cash flow, while simultaneously growing earnings per share at a rapid clip. This is a very favourable combination that can often lead to the dividend multiplying over the long term, if earnings grow and the company pays out a higher percentage of its earnings.
Unfortunately Orca Exploration Group has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.
The Bottom Line
Has Orca Exploration Group got what it takes to maintain its dividend payments? We love that Orca Exploration Group is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. These characteristics suggest the company is reinvesting in growing its business, while the conservative payout ratio also implies a reduced risk of the dividend being cut in the future. Overall we think this is an attractive combination and worthy of further research.
In light of that, while Orca Exploration Group has an appealing dividend, it's worth knowing the risks involved with this stock. For example - Orca Exploration Group has 3 warning signs we think you should be aware of.
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.
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