Why You Might Be Interested In Cardno Limited (ASX:CDD) For Its Upcoming Dividend

Cardno Limited (ASX:CDD) is about to trade ex-dividend in the next 4 days. If you purchase the stock on or after the 12th of March, you won't be eligible to receive this dividend, when it is paid on the 6th of April.

Cardno's upcoming dividend is AU$0.015 a share, following on from the last 12 months, when the company distributed a total of AU$0.03 per share to shareholders. Last year's total dividend payments show that Cardno has a trailing yield of 6.3% on the current share price of A$0.475. If you buy this business for its dividend, you should have an idea of whether Cardno's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

View our latest analysis for Cardno

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. Cardno paid out 53% of its earnings to investors last year, a normal payout level for most businesses.

Click here to see how much of its profit Cardno 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 Cardno has grown its earnings rapidly, up 59% a year for the past five years. Management appears to be striking a nice balance between reinvesting for growth and paying dividends to shareholders. With a reasonable payout ratio, profits being reinvested, and some earnings growth, Cardno could have strong prospects for future increases to the dividend.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Cardno's dividend payments per share have declined at 21% per year on average over the past 10 years, which is uninspiring. Cardno is a rare case where dividends have been decreasing at the same time as earnings per share have been improving. It's unusual to see, and could point to unstable conditions in the core business, or more rarely an intensified focus on reinvesting profits.

The Bottom Line

Has Cardno got what it takes to maintain its dividend payments? Earnings per share are growing nicely, and Cardno is paying out a percentage of its earnings that is around the average for dividend-paying stocks. Overall, Cardno looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

On that note, you'll want to research what risks Cardno is facing. For example - Cardno has 3 warning signs we think you should be aware of.

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.

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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. 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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