Be Sure To Check Out Cedar Woods Properties Limited (ASX:CWP) Before It Goes Ex-Dividend

Cedar Woods Properties Limited (ASX:CWP) stock is about to trade ex-dividend in 3 days. The ex-dividend date is commonly two business days before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is important as the process of settlement involves at least two full business days. So if you miss that date, you would not show up on the company's books on the record date. Meaning, you will need to purchase Cedar Woods Properties' shares before the 1st of October to receive the dividend, which will be paid on the 31st of October.

The company's next dividend payment will be AU$0.19 per share, and in the last 12 months, the company paid a total of AU$0.29 per share. Looking at the last 12 months of distributions, Cedar Woods Properties has a trailing yield of approximately 3.9% on its current stock price of AU$7.50. If you buy this business for its dividend, you should have an idea of whether Cedar Woods Properties's dividend is reliable and sustainable. So we need to investigate whether Cedar Woods Properties can afford its dividend, and if the dividend could grow.

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If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Cedar Woods Properties paid out a comfortable 50% of its profit last year. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. It paid out more than half (66%) of its free cash flow in the past year, which is within an average range for most companies.

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.

Check out our latest analysis for Cedar Woods Properties

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

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. If earnings fall far enough, the company could be forced to cut its dividend. For this reason, we're glad to see Cedar Woods Properties's earnings per share have risen 18% per annum over the last five years. Cedar Woods Properties has an average payout ratio which suggests a balance between growing earnings and rewarding shareholders. This is a reasonable combination that could hint at some further dividend increases in the future.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. It looks like the Cedar Woods Properties dividends are largely the same as they were 10 years ago.

To Sum It Up

Should investors buy Cedar Woods Properties for the upcoming dividend? Earnings per share have grown at a nice rate in recent times and over the last year, Cedar Woods Properties paid out less than half its earnings and a bit over half its free cash flow. It's a promising combination that should mark this company worthy of closer attention.

So while Cedar Woods Properties 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 1 warning sign for Cedar Woods Properties 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.