Yahoo Finance Caribbean Utilities Company (TSE:CUP.U) Is Increasing Its Dividend To $0.185
Caribbean Utilities Company, Ltd.'s (TSE:CUP.U) periodic dividend will be increasing on the 15th of June to $0.185, with investors receiving 2.8% more than last year's $0.18. This makes the dividend yield about the same as the industry average at 5.1%.
Check out our latest analysis for Caribbean Utilities Company
Caribbean Utilities Company's Payment Has Solid Earnings Coverage
We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. The last dividend made up quite a large portion of free cash flows, and this was made worse by the lack of free cash flows. Generally, we think that this would be a risky long term practice.
The next year is set to see EPS grow by 3.4%. If the dividend continues on this path, the payout ratio could be 70% by next year, which we think can be pretty sustainable going forward.
Caribbean Utilities Company Is Still Building Its Track Record
It is great to see that Caribbean Utilities Company has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. Since 2018, the dividend has gone from $0.68 total annually to $0.72. Its dividends have grown at less than 1% per annum over this time frame. Modest dividend growth is good to see, especially with the payments being relatively stable. However, the payment history is relatively short and we wouldn't want to rely on this dividend too much.
The Dividend's Growth Prospects Are Limited
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Earnings have grown at around 3.9% a year for the past five years, which isn't massive but still better than seeing them shrink. Caribbean Utilities Company's earnings per share has barely grown, which is not ideal - perhaps this is why the company pays out the majority of its earnings to shareholders. That's fine as far as it goes, but we're less enthusiastic as this often signals that the dividend is likely to grow slower in the future.
In Summary
Overall, we always like to see the dividend being raised, but we don't think Caribbean Utilities Company will make a great income stock. While Caribbean Utilities Company is earning enough to cover the payments, the cash flows are lacking. We don't think Caribbean Utilities Company is a great stock to add to your portfolio if income is your focus.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've identified 2 warning signs for Caribbean Utilities Company (1 shouldn't be ignored!) that you should be aware of before investing. Is Caribbean Utilities Company 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.
