Yahoo Finance CTI Logistics Limited (ASX:CLX) Looks Like A Good Stock, And It's Going Ex-Dividend Soon
CTI Logistics Limited (ASX:CLX) is about to trade ex-dividend in the next 4 days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. 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. Thus, you can purchase CTI Logistics' shares before the 14th of September in order to receive the dividend, which the company will pay on the 16th of October.
The company's next dividend payment will be AU$0.05 per share, on the back of last year when the company paid a total of AU$0.10 to shareholders. Last year's total dividend payments show that CTI Logistics has a trailing yield of 6.2% on the current share price of A$1.625. If you buy this business for its dividend, you should have an idea of whether CTI Logistics's dividend is reliable and sustainable. So we need to investigate whether CTI Logistics can afford its dividend, and if the dividend could grow.
Check out our latest analysis for CTI Logistics
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 CTI Logistics paying out a modest 45% 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. Thankfully its dividend payments took up just 31% of the free cash flow it generated, which is a comfortable payout ratio.
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 CTI Logistics paid out over the last 12 months.
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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's encouraging to see CTI Logistics has grown its earnings rapidly, up 32% a year for the past five years. CTI Logistics 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.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last 10 years, CTI Logistics has lifted its dividend by approximately 3.6% a year on average. Earnings per share have been growing much quicker than dividends, potentially because CTI Logistics is keeping back more of its profits to grow the business.
The Bottom Line
Should investors buy CTI Logistics for the upcoming dividend? CTI Logistics has grown its earnings per share while simultaneously reinvesting in the business. Unfortunately it's cut the dividend at least once in the past 10 years, but the conservative payout ratio makes the current dividend look sustainable. CTI Logistics looks solid on this analysis overall, and we'd definitely consider investigating it more closely.
So while CTI Logistics looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. For example, we've found 2 warning signs for CTI Logistics that we recommend you consider before investing in the business.
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.
