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- AIM:CHRT
Be Sure To Check Out Cohort plc (LON:CHRT) Before It Goes Ex-Dividend
Cohort plc (LON:CHRT) stock is about to trade ex-dividend in 2 days. This means that investors who purchase shares on or after the 17th of December will not receive the dividend, which will be paid on the 4th of February.
Cohort's next dividend payment will be UK£0.035 per share, on the back of last year when the company paid a total of UK£0.10 to shareholders. Calculating the last year's worth of payments shows that Cohort has a trailing yield of 1.8% on the current share price of £5.7. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. We need to see whether the dividend is covered by earnings and if it's growing.
Check out our latest analysis for Cohort
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. That's why it's good to see Cohort paying out a modest 46% of its earnings. A useful secondary check can be to evaluate whether Cohort generated enough free cash flow to afford its dividend. Dividends consumed 56% of the company's free cash flow last year, which is within a normal range for most dividend-paying organisations.
It's positive to see that Cohort's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.
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 decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Fortunately for readers, Cohort's earnings per share have been growing at 10% a year for the past five years. Cohort is paying out a bit over half its earnings, which suggests the company is striking a balance between reinvesting in growth, and paying dividends. This is a reasonable combination that could hint at some further dividend increases in the future.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Cohort has delivered 17% dividend growth per year on average over the past 10 years. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.
The Bottom Line
Is Cohort an attractive dividend stock, or better left on the shelf? From a dividend perspective, we're encouraged to see that earnings per share have been growing, the company is paying out less than half of its earnings, and a bit over half its free cash flow. Overall we think this is an attractive combination and worthy of further research.
Curious what other investors think of Cohort? See what analysts are forecasting, with this visualisation of its historical and future estimated earnings and cash flow.
If you're in the market for dividend stocks, we recommend checking our list of top 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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About AIM:CHRT
Cohort
Provides a various products and services in defense, security, and related markets in the United Kingdom, Germany, Portugal, Africa, North and South America, and the Asia Pacific and Africa, and other European countries.
Flawless balance sheet with solid track record and pays a dividend.