CDL Investments New Zealand (NZSE:CDI) Is Paying Out A Dividend Of NZ$0.0412

CDL Investments New Zealand Limited's (NZSE:CDI) investors are due to receive a payment of NZ$0.0412 per share on 12th of May. Based on this payment, the dividend yield will be 4.5%, which is fairly typical for the industry.

Check out our latest analysis for CDL Investments New Zealand

CDL Investments New Zealand's Dividend Is Well Covered By Earnings

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Based on the last payment, CDL Investments New Zealand was paying only paying out a fraction of earnings, but the payment was a massive 103% of cash flows. While the business may be attempting to set a balanced dividend policy, a cash payout ratio this high might expose the dividend to being cut if the business ran into some challenges.

Unless the company can turn things around, EPS could fall by 1.4% over the next year. Assuming the dividend continues along recent trends, we believe the payout ratio could be 41%, which we are pretty comfortable with and we think is feasible on an earnings basis.

CDL Investments New Zealand Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The dividend has gone from an annual total of NZ$0.014 in 2013 to the most recent total annual payment of NZ$0.035. This means that it has been growing its distributions at 9.6% per annum over that time. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.

Dividend Growth May Be Hard To Achieve

The company's investors will be pleased to have been receiving dividend income for some time. Let's not jump to conclusions as things might not be as good as they appear on the surface. CDL Investments New Zealand hasn't seen much change in its earnings per share over the last five years.

Our Thoughts On CDL Investments New Zealand's Dividend

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. We don't think CDL Investments New Zealand is a great stock to add to your portfolio if income is your focus.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Case in point: We've spotted 2 warning signs for CDL Investments New Zealand (of which 1 doesn't sit too well with us!) you should know about. Is CDL Investments New Zealand not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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