Is Buying Computer Programs and Systems Inc (NASDAQ:CPSI) For Its Upcoming $0.1 Dividend A Good Choice?
If you are interested in cashing in on Computer Programs and Systems Inc’s (NASDAQ:CPSI) upcoming dividend of $0.1 per share, you only have 3 days left to buy the shares before its ex-dividend date, 21 February 2018, in time for dividends payable on the 09 March 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine Computer Programs and Systems’s latest financial data to analyse its dividend characteristics. Check out our latest analysis for Computer Programs and Systems
5 checks you should use to assess a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
Is their annual yield among the top 25% of dividend payers?
Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
Has dividend per share amount increased over the past?
Does earnings amply cover its dividend payments?
Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
Does Computer Programs and Systems pass our checks?
The current payout ratio for CPSI is negative, meaning that the company is not yet profitable and is paying dividend by dipping into its retained earnings. Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. Dividend payments from Computer Programs and Systems have been volatile in the past 10 years, with some years experiencing significant drops of over 25%. This means that dividend hunters should probably steer clear of the stock, at least for now until the track record improves. Compared to its peers, Computer Programs and Systems generates a yield of 2.72%, which is high for Healthcare Services stocks but still below the market’s top dividend payers.
Next Steps:
Now you know to keep in mind the reason why investors should be careful investing in Computer Programs and Systems for the dividend. On the other hand, if you are not strictly just a dividend investor, the stock could still be offering some interesting investment opportunities. 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. I’ve put together three fundamental aspects you should look at:
1. Future Outlook: What are well-informed industry analysts predicting for CPSI’s future growth? Take a look at our free research report of analyst consensus for CPSI’s outlook.
2. Valuation: What is CPSI 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 CPSI is currently mispriced by the market.
3. 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.
