Should Income Investors Buy CF Industries Holdings Inc (NYSE:CF) Before Its Ex-Dividend?

On the 31 August 2018, CF Industries Holdings Inc (NYSE:CF) will be paying shareholders an upcoming dividend amount of US$0.30 per share. However, investors must have bought the company’s stock before 14 August 2018 in order to qualify for the payment. That means you have only 2 days left! Is this future income a persuasive enough catalyst for investors to think about CF Industries Holdings as an investment today? Below, I’m going to look at the latest data and analyze the stock and its dividend property in further detail.

Check out our latest analysis for CF Industries Holdings

Here’s how I find good dividend stocks

When researching a dividend stock, I always follow the following screening criteria:

  • 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?
  • Can it afford to pay the current rate of dividends from its earnings?
  • Will it be able to continue to payout at the current rate in the future?
NYSE:CF Historical Dividend Yield August 11th 18
NYSE:CF Historical Dividend Yield August 11th 18

How does CF Industries Holdings fare?

CF Industries Holdings has a trailing twelve-month payout ratio of 47.64%, which means that the dividend is covered by earnings. Going forward, analysts expect CF’s payout to increase to 55.86% of its earnings, which leads to a dividend yield of around 2.53%. However, EPS is forecasted to fall to $1.68 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.

If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. CF has increased its DPS from $0.080 to $1.2 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock.

Relative to peers, CF Industries Holdings generates a yield of 2.41%, which is high for Chemicals stocks but still below the market’s top dividend payers.

Next Steps:

Taking into account the dividend metrics, CF Industries Holdings ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. 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 key aspects you should look at:

  1. Future Outlook: What are well-informed industry analysts predicting for CF’s future growth? Take a look at our free research report of analyst consensus for CF’s outlook.
  2. Valuation: What is CF 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 CF is currently mispriced by the market.
  3. 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.