CTI Logistics (ASX:CLX) Has Announced That It Will Be Increasing Its Dividend To A$0.05

CTI Logistics Limited (ASX:CLX) has announced that it will be increasing its dividend from last year's comparable payment on the 16th of October to A$0.05. This will take the dividend yield to an attractive 6.3%, providing a nice boost to shareholder returns.

See our latest analysis for CTI Logistics

CTI Logistics' Payment Has Solid Earnings Coverage

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. The last dividend was quite easily covered by CTI Logistics' earnings. This indicates that quite a large proportion of earnings is being invested back into the business.

Looking forward, earnings per share could rise by 31.7% over the next year if the trend from the last few years continues. If the dividend continues on this path, the payout ratio could be 33% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2013, the annual payment back then was A$0.07, compared to the most recent full-year payment of A$0.10. This implies that the company grew its distributions at a yearly rate of about 3.6% over that duration. We're glad to see the dividend has risen, but with a limited rate of growth and fluctuations in the payments the total shareholder return may be limited.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. CTI Logistics has impressed us by growing EPS at 32% per year over the past five years. The company doesn't have any problems growing, despite returning a lot of capital to shareholders, which is a very nice combination for a dividend stock to have.

CTI Logistics Looks Like A Great Dividend Stock

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 2 warning signs for CTI Logistics that investors should take into consideration. Is CTI Logistics not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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