Camping World Holdings (NYSE:CWH) Has Announced A Dividend Of $0.125

The board of Camping World Holdings, Inc. (NYSE:CWH) has announced that it will pay a dividend of $0.125 per share on the 27th of March. This makes the dividend yield 2.4%, which will augment investor returns quite nicely.

See our latest analysis for Camping World Holdings

Camping World Holdings' Future Dividend Projections Seem Positive

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. While Camping World Holdings is not profitable, it is paying out less than 75% of its free cash flow, which means that there is plenty left over for reinvestment into 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. If the dividend continues along recent trends, we estimate the payout ratio will be 18%, so there isn't too much pressure on the dividend.

Camping World Holdings' Dividend Has Lacked Consistency

Camping World Holdings has been paying dividends for a while, but the track record isn't stellar. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. Since 2017, the annual payment back then was $0.32, compared to the most recent full-year payment of $0.50. This works out to be a compound annual growth rate (CAGR) of approximately 5.7% a year over that time. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. Camping World Holdings might have put its house in order since then, but we remain cautious.

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. Unfortunately, Camping World Holdings' earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year.

An additional note is that the company has been raising capital by issuing stock equal to 18% of shares outstanding in the last 12 months. Regularly doing this can be detrimental - it's hard to grow dividends per share when new shares are regularly being created.

Camping World Holdings' Dividend Doesn't Look Sustainable

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. We don't think Camping World Holdings is a great stock to add to your portfolio if income is your focus.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Just as an example, we've come across 3 warning signs for Camping World Holdings you should be aware of, and 1 of them is a bit concerning. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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