Caxton and CTP Publishers and Printers Limited (JSE:CAT) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

Caxton and CTP Publishers and Printers Limited (JSE:CAT) is about to trade ex-dividend in the next three days. Typically, the ex-dividend date is two business days before the record date, which is the date on which a company determines the shareholders eligible to receive a dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. This means that investors who purchase Caxton and CTP Publishers and Printers' shares on or after the 3rd of December will not receive the dividend, which will be paid on the 8th of December.

The company's next dividend payment will be R00.70 per share, on the back of last year when the company paid a total of R0.70 to shareholders. Last year's total dividend payments show that Caxton and CTP Publishers and Printers has a trailing yield of 5.0% on the current share price of R013.95. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Caxton and CTP Publishers and Printers has been able to grow its dividends, or if the dividend might be cut.

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Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Fortunately Caxton and CTP Publishers and Printers's payout ratio is modest, at just 42% of profit. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. Fortunately, it paid out only 38% of its free cash flow in the past year.

It's positive to see that Caxton and CTP Publishers and Printers's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

See our latest analysis for Caxton and CTP Publishers and Printers

Click here to see how much of its profit Caxton and CTP Publishers and Printers paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings fall far enough, the company could be forced to cut its dividend. That's why it's comforting to see Caxton and CTP Publishers and Printers's earnings have been skyrocketing, up 22% per annum for the past five years. Caxton and CTP Publishers and Printers is paying out less than half its earnings and cash flow, while simultaneously growing earnings per share at a rapid clip. Companies with growing earnings and low payout ratios are often the best long-term dividend stocks, as the company can both grow its earnings and increase the percentage of earnings that it pays out, essentially multiplying the dividend.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the past 10 years, Caxton and CTP Publishers and Printers has increased its dividend at approximately 0.7% a year on average. Earnings per share have been growing much quicker than dividends, potentially because Caxton and CTP Publishers and Printers is keeping back more of its profits to grow the business.

The Bottom Line

Is Caxton and CTP Publishers and Printers worth buying for its dividend? It's great that Caxton and CTP Publishers and Printers is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. It's disappointing to see the dividend has been cut at least once in the past, but as things stand now, the low payout ratio suggests a conservative approach to dividends, which we like. Caxton and CTP Publishers and Printers looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

While it's tempting to invest in Caxton and CTP Publishers and Printers for the dividends alone, you should always be mindful of the risks involved. For example - Caxton and CTP Publishers and Printers has 1 warning sign we think you should be aware of.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.