Is It Worth Considering Canterbury Park Holding Corporation (NASDAQ:CPHC) For Its Upcoming Dividend?

Canterbury Park Holding Corporation (NASDAQ:CPHC) stock is about to trade ex-dividend in 4 days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Meaning, you will need to purchase Canterbury Park Holding's shares before the 28th of June to receive the dividend, which will be paid on the 12th of July.

The company's next dividend payment will be US$0.07 per share, on the back of last year when the company paid a total of US$0.28 to shareholders. Calculating the last year's worth of payments shows that Canterbury Park Holding has a trailing yield of 1.3% on the current share price of US$21.90. If you buy this business for its dividend, you should have an idea of whether Canterbury Park Holding'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.

Check out our latest analysis for Canterbury Park Holding

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Canterbury Park Holding has a low and conservative payout ratio of just 16% of its income after tax. A useful secondary check can be to evaluate whether Canterbury Park Holding generated enough free cash flow to afford its dividend.

Click here to see how much of its profit Canterbury Park Holding paid out over the last 12 months.

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 fall far enough, the company could be forced to cut its dividend. With that in mind, we're encouraged by the steady growth at Canterbury Park Holding, with earnings per share up 6.7% on average over the last five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Canterbury Park Holding has delivered an average of 1.4% per year annual increase in its dividend, based on the past eight years of dividend payments.

To Sum It Up

From a dividend perspective, should investors buy or avoid Canterbury Park Holding? Canterbury Park Holding has seen its earnings per share grow steadily and paid out less than half its profit over the last year. Unfortunately, its dividend was not well covered by free cash flow. All things considered, we are not particularly enthused about Canterbury Park Holding from a dividend perspective.

If you're not too concerned about Canterbury Park Holding's ability to pay dividends, you should still be mindful of some of the other risks that this business faces. In terms of investment risks, we've identified 1 warning sign with Canterbury Park Holding and understanding them should be part of your investment process.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com