Camping World Holdings' (NYSE:CWH) Dividend Will Be $0.125

The board of Camping World Holdings, Inc. (NYSE:CWH) has announced that it will pay a dividend on the 30th of December, with investors receiving $0.125 per share. This means the dividend yield will be fairly typical at 2.0%.

View our latest analysis for Camping World Holdings

Camping World Holdings' Future Dividend Projections Seem Positive

Unless the payments are sustainable, the dividend yield doesn't mean too much. Camping World Holdings is not generating a profit, but its free cash flows easily cover the dividend, leaving plenty for reinvestment in the business. We generally think that cash flow is more important than accounting measures of profit, so we are fairly comfortable with the dividend at this level.

Looking forward, earnings per share is forecast to rise exponentially over the next year. Assuming the dividend continues along recent trends, we think the payout ratio will be 18%, which makes us pretty comfortable with the sustainability of the dividend.

Camping World Holdings' Dividend Has Lacked Consistency

Looking back, Camping World Holdings' dividend hasn't been particularly consistent. This makes us cautious about the consistency of the dividend over a full economic cycle. Since 2016, the dividend has gone from $0.32 total annually to $0.50. This works out to be a compound annual growth rate (CAGR) of approximately 5.7% a year over that time. A reasonable rate of dividend growth is good to see, but we're wary that the dividend history is not as solid as we'd like, having been cut at least once.

Camping World Holdings May Find It Hard To Grow The Dividend

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Camping World Holdings hasn't seen much change in its earnings per share over the last five years.

Camping World Holdings' Dividend Doesn't Look Sustainable

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. The payments haven't been particularly stable and we don't see huge growth potential, but with the dividend well covered by cash flows it could prove to be reliable over the short term. We would be a touch cautious of relying on this stock primarily for the dividend income.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. To that end, Camping World Holdings has 3 warning signs (and 1 which is a bit unpleasant) we think you should know about. Is Camping World Holdings not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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