Cenovus Energy Inc (TSE:CVE): What You Have To Know Before Buying For The Upcoming Dividend
On the 29 March 2018, Cenovus Energy Inc (TSX:CVE) will be paying shareholders an upcoming dividend amount of CA$0.05 per share. However, investors must have bought the company’s stock before 14 March 2018 in order to qualify for the payment. That means you have only 6 days left! Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine Cenovus Energy’s latest financial data to analyse its dividend characteristics. Check out our latest analysis for Cenovus Energy
5 questions to ask before buying a dividend stock
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 amount increased over the past?
Can it afford to pay the current rate of dividends from its earnings?
Will it have the ability to keep paying its dividends going forward?
Does Cenovus Energy pass our checks?
The current trailing twelve-month payout ratio for the stock is 9.72%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a higher payout ratio of 27.95%, leading to a dividend yield of around 1.96%. However, EPS is forecasted to fall to CA$0.16 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 Cenovus Energy as a dividend investment. It has only been consistently paying dividends for 8 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. Compared to its peers, Cenovus Energy generates a yield of 1.90%, which is on the low-side for Oil and Gas stocks.
Next Steps:
After digging a little deeper into Cenovus Energy’s yield, it’s easy to see why you should be cautious investing in the company just for the dividend. 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 important factors you should look at:
Future Outlook: What are well-informed industry analysts predicting for CVE’s future growth? Take a look at our free research report of analyst consensus for CVE’s outlook.
Valuation: What is CVE 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 CVE 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.
