Important news for shareholders and potential investors in Cal-Maine Foods Inc (NASDAQ:CALM): The dividend payment of US$0.35 per share will be distributed into shareholder on 21 August 2018, and the stock will begin trading ex-dividend at an earlier date, 03 August 2018. What does this mean for current shareholders and potential investors? Below, I will explain how holding Cal-Maine Foods can impact your portfolio income stream, by analysing the stock's most recent financial data and dividend attributes.
See our latest analysis for Cal-Maine Foods
5 checks you should do on a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
- Is it paying an annual yield above 75% of dividend payers?
- Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
- Has dividend per share amount increased over the past?
- Is its earnings sufficient to payout dividend at the current rate?
- Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
Does Cal-Maine Foods pass our checks?
Cal-Maine Foods has a trailing twelve-month payout ratio of 13.48%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect CALM's payout to increase to 29.96% of its earnings, which leads to a dividend yield of 1.94%. However, EPS is forecasted to fall to $2.4 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.
If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you're eyeing out is reliable in its payments. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Shareholders would have seen a few years of reduced payments in this time.
Compared to its peers, Cal-Maine Foods has a yield of 3.12%, which is high for Food stocks but still below the market's top dividend payers.
Next Steps:
Considering the dividend attributes we analyzed above, Cal-Maine Foods is definitely worth keeping an eye on for someone looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. I've put together three relevant aspects you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for CALM’s future growth? Take a look at our free research report of analyst consensus for CALM’s outlook.
- Valuation: What is CALM 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 CALM is currently mispriced by the market.
- Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article 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.