Cable One (NYSE:CABO) Will Pay A Dividend Of $2.95

Cable One, Inc. (NYSE:CABO) will pay a dividend of $2.95 on the 13th of September. Based on this payment, the dividend yield will be 3.2%, which is fairly typical for the industry.

View our latest analysis for Cable One

Cable One's Payment Has Solid Earnings Coverage

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. Before making this announcement, Cable One was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

EPS is set to fall by 39.9% over the next 12 months. Assuming the dividend continues along recent trends, we believe the payout ratio could be 49%, which we are pretty comfortable with and we think is feasible on an earnings basis.

Cable One Is Still Building Its Track Record

Cable One's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. The dividend has gone from an annual total of $6.00 in 2015 to the most recent total annual payment of $11.80. This means that it has been growing its distributions at 7.8% per annum over that time. 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.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. We are encouraged to see that Cable One has grown earnings per share at 10% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Cable One's prospects of growing its dividend payments in the future.

Cable One Looks Like A Great Dividend Stock

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. All of these factors considered, we think this has solid potential as a dividend stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. To that end, Cable One has 3 warning signs (and 2 which shouldn't be ignored) we think you should know about. Is Cable One not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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