Investors who want to cash in on Cineplex Inc’s (TSE:CGX) upcoming dividend of CA$0.14 per share have only 2 days left to buy the shares before its ex-dividend date, 30 August 2018, in time for dividends payable on the 28 September 2018. Should you diversify into Cineplex and boost your portfolio income stream? Well, keep on reading because today, I’m going to look at the latest data and analyze the stock and its dividend property in further detail.
How I analyze a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
- Is it the top 25% annual dividend yield payer?
- 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?
How well does Cineplex fit our criteria?
The company currently pays out 125% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is not well-covered by its earnings. Going forward, analysts expect CGX’s payout to reduce to 109% of its earnings, which leads to a dividend yield of 5.4%. However, EPS should increase to CA$1.4, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
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. CGX has increased its DPS from CA$1.26 to CA$1.74 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 CGX a true dividend rockstar.
Compared to its peers, Cineplex has a yield of 5.3%, which is high for Media stocks.
Taking into account the dividend metrics, Cineplex ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. 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 pertinent factors you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for CGX’s future growth? Take a look at our free research report of analyst consensus for CGX’s outlook.
- Valuation: What is CGX 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 CGX 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 past 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. For errors that warrant correction please contact the editor at email@example.com.