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Is Buying Capital Southwest Corporation (NASDAQ:CSWC) For Its Upcoming $0.28 Dividend A Good Choice?

Bryan Cramer

If you are interested in cashing in on Capital Southwest Corporation’s (NASDAQ:CSWC) upcoming dividend of $0.28 per share, you only have 3 days left to buy the shares before its ex-dividend date, 14 March 2018, in time for dividends payable on the 02 April 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine Capital Southwest’s latest financial data to analyse its dividend characteristics. See our latest analysis for Capital Southwest

5 checks you should do on a dividend stock

When researching a dividend stock, I always follow the following screening criteria:

  • Is its annual yield among the top 25% of dividend-paying companies?
  • Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
  • Has the amount of dividend per share grown over the past?
  • Is its earnings sufficient to payout dividend at the current rate?
  • Will the company be able to keep paying dividend based on the future earnings growth?
NasdaqGS:CSWC Historical Dividend Yield Mar 10th 18

Does Capital Southwest pass our checks?

The company currently pays out 47.64% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward. If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Shareholders would have seen a few years of reduced payments in this time. Relative to peers, Capital Southwest generates a yield of 6.38%, which is high for Capital Markets stocks.

Next Steps:

Considering the dividend attributes we analyzed above, Capital Southwest is definitely worth keeping an eye on for someone looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. I’ve put together three relevant factors you should look at:

  1. Future Outlook: What are well-informed industry analysts predicting for CSWC’s future growth? Take a look at our free research report of analyst consensus for CSWC’s outlook.
  2. Valuation: What is CSWC 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 CSWC is currently mispriced by the market.
  3. Other 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.