Cable One (NYSE:CABO) Is Due To Pay A Dividend Of $2.95

Cable One, Inc.'s (NYSE:CABO) investors are due to receive a payment of $2.95 per share on 20th of December. This means that the annual payment will be 2.8% of the current stock price, which is in line with the average for the industry.

See our latest analysis for Cable One

Cable One's Future Dividend Projections Appear Well Covered By Earnings

Solid dividend yields are great, but they only really help us if the payment is sustainable. However, prior to this announcement, Cable One's dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.

Looking forward, earnings per share is forecast to fall by 33.9% over the next year. If the dividend continues along recent trends, we estimate the payout ratio could be 50%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

Cable One Doesn't Have A Long Payment History

Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. The dividend has gone from an annual total of $6.00 in 2015 to the most recent total annual payment of $11.80. This implies that the company grew its distributions at a yearly rate of about 7.8% over that duration. Cable One has a nice track record of dividend growth but we would wait until we see a longer track record before getting too confident.

We Could See Cable One's Dividend Growing

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that Cable One has been growing its earnings per share at 6.2% a year over the past five years. Cable One definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

In Summary

Overall, a consistent dividend is a good thing, and we think that Cable One has the ability to continue this into the future. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 2 warning signs for Cable One that investors should know about before committing capital to this stock. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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