3 Days Left Before The Cheesecake Factory Incorporated (NASDAQ:CAKE) Will Start Trading Ex-Dividend, Should Investors Buy?
If you are interested in cashing in on The Cheesecake Factory Incorporated’s (NASDAQ:CAKE) upcoming dividend of $0.29 per share, you only have 3 days left to buy the shares before its ex-dividend date, 09 May 2018, in time for dividends payable on the 22 May 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine Cheesecake Factory’s latest financial data to analyse its dividend characteristics. See our latest analysis for Cheesecake Factory
5 checks you should use to assess a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
Is their annual yield among the top 25% of dividend payers?
Does it consistently pay out dividends without missing a payment of significantly cutting payout?
Has it increased its dividend per share amount over the past?
Is its earnings sufficient to payout dividend at the current rate?
Will it be able to continue to payout at the current rate in the future?
Does Cheesecake Factory pass our checks?
The current trailing twelve-month payout ratio for the stock is 34.72%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a higher payout ratio of 49.64%, leading to a dividend yield of 2.54%. However, EPS is forecasted to fall to $2.76 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. The reality is that it is too early to consider Cheesecake Factory as a dividend investment. It has only been consistently paying dividends for 6 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. In terms of its peers, Cheesecake Factory has a yield of 2.19%, which is on the low-side for Hospitality stocks.
Next Steps:
Taking all the above into account, Cheesecake Factory is a complicated pick for dividend investors given that there are a couple of positive things about it as well as negative. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. There are three relevant aspects you should further research:
Future Outlook: What are well-informed industry analysts predicting for CAKE’s future growth? Take a look at our free research report of analyst consensus for CAKE’s outlook.
Valuation: What is CAKE worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether CAKE is currently mispriced by the market.
Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
