Why You Might Be Interested In Pangaea Logistics Solutions, Ltd. (NASDAQ:PANL) For Its Upcoming Dividend
Readers hoping to buy Pangaea Logistics Solutions, Ltd. (NASDAQ:PANL) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. This means that investors who purchase Pangaea Logistics Solutions' shares on or after the 30th of November will not receive the dividend, which will be paid on the 15th of December.
The company's upcoming dividend is US$0.035 a share, following on from the last 12 months, when the company distributed a total of US$0.14 per share to shareholders. Based on the last year's worth of payments, Pangaea Logistics Solutions has a trailing yield of 3.4% on the current stock price of $4.11. If you buy this business for its dividend, you should have an idea of whether Pangaea Logistics Solutions's dividend is reliable and sustainable. So we need to investigate whether Pangaea Logistics Solutions can afford its dividend, and if the dividend could grow.
See our latest analysis for Pangaea Logistics Solutions
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. Pangaea Logistics Solutions paid out just 9.2% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. A useful secondary check can be to evaluate whether Pangaea Logistics Solutions generated enough free cash flow to afford its dividend. Pangaea Logistics Solutions paid a dividend despite reporting negative free cash flow over the last twelve months. This may be due to heavy investment in the business, but this is still suboptimal from a dividend sustainability perspective.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. It's encouraging to see Pangaea Logistics Solutions has grown its earnings rapidly, up 32% a year for the past five years.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Pangaea Logistics Solutions's dividend payments are effectively flat on where they were three years ago.
The Bottom Line
From a dividend perspective, should investors buy or avoid Pangaea Logistics Solutions? We like that Pangaea Logistics Solutions has been successfully growing its earnings per share at a nice rate and reinvesting most of its profits in the business. However, we note the high cashflow payout ratio with some concern. To summarise, Pangaea Logistics Solutions looks okay on this analysis, although it doesn't appear a stand-out opportunity.
In light of that, while Pangaea Logistics Solutions has an appealing dividend, it's worth knowing the risks involved with this stock. For example, we've found 4 warning signs for Pangaea Logistics Solutions (2 are potentially serious!) that deserve your attention before investing in the shares.
We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
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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