- Oops!Something went wrong.Please try again later.
It looks like Columbia Sportswear Company (NASDAQ:COLM) is about to go ex-dividend in the next three days. You can purchase shares before the 12th of May in order to receive the dividend, which the company will pay on the 27th of May.
Columbia Sportswear's next dividend payment will be US$0.26 per share. Last year, in total, the company distributed US$1.04 to shareholders. Last year's total dividend payments show that Columbia Sportswear has a trailing yield of 1.0% on the current share price of $108.21. If you buy this business for its dividend, you should have an idea of whether Columbia Sportswear's dividend is reliable and sustainable. So we need to investigate whether Columbia Sportswear can afford its dividend, and if the dividend could grow.
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Luckily it paid out just 4.9% of its free cash flow last year.
Have Earnings And Dividends Been Growing?
Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If earnings fall far enough, the company could be forced to cut its dividend. It's not encouraging to see that Columbia Sportswear's earnings are effectively flat over the past five years. It's better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Columbia Sportswear has delivered an average of 11% per year annual increase in its dividend, based on the past 10 years of dividend payments.
To Sum It Up
From a dividend perspective, should investors buy or avoid Columbia Sportswear? While it's not great to see that earnings per share are effectively flat over the 10-year period we checked, at least the payout ratios are low and conservative. Overall, it's hard to get excited about Columbia Sportswear from a dividend perspective.
So while Columbia Sportswear looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. To help with this, we've discovered 1 warning sign for Columbia Sportswear that you should be aware of before investing in their shares.
If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.