Canterbury Park Holding's (NASDAQ:CPHC) Dividend Will Be $0.07

Canterbury Park Holding Corporation's (NASDAQ:CPHC) investors are due to receive a payment of $0.07 per share on 12th of January. This payment means the dividend yield will be 1.4%, which is below the average for the industry.

View our latest analysis for Canterbury Park Holding

Canterbury Park Holding's Payment Has Solid Earnings Coverage

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. Before making this announcement, Canterbury Park Holding was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

If the trend of the last few years continues, EPS will grow by 11.9% over the next 12 months. Assuming the dividend continues along recent trends, we think the payout ratio could be 13% by next year, which is in a pretty sustainable range.

Canterbury Park Holding's Dividend Has Lacked Consistency

Canterbury Park Holding has been paying dividends for a while, but the track record isn't stellar. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. The dividend has gone from an annual total of $0.25 in 2016 to the most recent total annual payment of $0.28. This works out to be a compound annual growth rate (CAGR) of approximately 1.6% a year over that time. 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. We are encouraged to see that Canterbury Park Holding has grown earnings per share at 12% per year over the past five years. Canterbury Park Holding definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Canterbury Park Holding Looks Like A Great Dividend Stock

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

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. For example, we've picked out 3 warning signs for Canterbury Park Holding that investors should know about before committing capital to this stock. Is Canterbury Park Holding not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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