Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) stock is about to trade ex-dividend in 4 days time. This means that investors who purchase shares on or after the 16th of January will not receive the dividend, which will be paid on the 5th of February.
Cracker Barrel Old Country Store’s next dividend payment will be US$1.30 per share, on the back of last year when the company paid a total of US$8.20 to shareholders. Based on the last year’s worth of payments, Cracker Barrel Old Country Store stock has a trailing yield of around 5.2% on the current share price of $158.32. If you buy this business for its dividend, you should have an idea of whether Cracker Barrel Old Country Store’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.
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. Cracker Barrel Old Country Store paid out 56% of its earnings to investors last year, a normal payout level for most businesses. 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. 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 Cracker Barrel Old Country Store’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.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. For this reason, we’re glad to see Cracker Barrel Old Country Store’s earnings per share have risen 10% per annum over the last five years. Cracker Barrel Old Country Store 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.
Another key way to measure a company’s dividend prospects is by measuring its historical rate of dividend growth. In the last ten years, Cracker Barrel Old Country Store has lifted its dividend by approximately 26% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.
The Bottom Line
Is Cracker Barrel Old Country Store an attractive dividend stock, or better left on the shelf? Higher earnings per share generally lead to higher dividends from dividend-paying stocks over the long run. That’s why we’re glad to see Cracker Barrel Old Country Store’s earnings per share growing, although as we saw, the company is paying out more than half of its earnings and cashflow – 56% and 56% respectively. In summary, while it has some positive characteristics, we’re not inclined to race out and buy Cracker Barrel Old Country Store today.
Wondering what the future holds for Cracker Barrel Old Country Store? See what the ten analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.
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