Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. Cabot Corporation (NYSE:CBT) has returned to shareholders over the past 10 years, an average dividend yield of 2.00% annually. Should it have a place in your portfolio? Let’s take a look at Cabot in more detail. Check out our latest analysis for Cabot
Here’s how I find good dividend stocks
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
- Is it the top 25% annual dividend yield payer?
- Has it paid dividend every year without dramatically reducing payout in the past?
- Has dividend per share risen in the past couple of years?
- Is is able to pay the current rate of dividends from its earnings?
- Will it be able to continue to payout at the current rate in the future?
Does Cabot pass our checks?
The current payout ratio for CBT is negative, meaning that the company is not yet profitable and is paying dividend by dipping into its retained earnings.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. CBT has increased its DPS from $0.72 to $1.32 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. This is an impressive feat, which makes CBT a true dividend rockstar.
Relative to peers, Cabot generates a yield of 2.14%, which is on the low-side for Chemicals stocks.
Keeping in mind the dividend characteristics above, Cabot is definitely worth considering for investors looking to build a dedicated income portfolio. 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 important factors you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for CBT’s future growth? Take a look at our free research report of analyst consensus for CBT’s outlook.
- Valuation: What is CBT 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 CBT is currently mispriced by the market.
- 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.