On the 14 May 2018, Capital Product Partners LP. (NASDAQ:CPLP) will be paying shareholders an upcoming dividend amount of $0.08 per share. However, investors must have bought the company’s stock before 01 May 2018 in order to qualify for the payment. That means you have only 3 days left! Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at Capital Product Partners’s most recent financial data to examine its dividend characteristics in more detail. See our latest analysis for Capital Product Partners
5 questions to ask before buying a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
- Is its annual yield among the top 25% of dividend-paying companies?
- Has it paid dividend every year without dramatically reducing payout in the past?
- Has it increased its dividend per share amount over the past?
- Does earnings amply cover its dividend payments?
- Will it be able to continue to payout at the current rate in the future?
Does Capital Product Partners pass our checks?The current trailing twelve-month payout ratio for CPLP is 148.29%, which means that the dividend is not well-covered by its earnings. Going forward, analysts expect CPLP’s payout to reduce to 126.53% of its earnings, which leads to a dividend yield of around 10.96%. However, EPS should increase to $0.29, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Not only have dividend payouts from Capital Product Partners fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. These characteristics do not bode well for income investors seeking reliable stream of dividends. Compared to its peers, Capital Product Partners has a yield of 9.88%, which is high for Oil and Gas stocks.
After digging a little deeper into Capital Product Partners’s yield, it’s easy to see why you should be cautious investing in the company just for the dividend. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. I’ve put together three important factors you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for CPLP’s future growth? Take a look at our free research report of analyst consensus for CPLP’s outlook.
- Valuation: What is CPLP worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether CPLP is currently mispriced by the market.
- Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.