Consolidated Water (NASDAQ:CWCO) Is Paying Out A Dividend Of $0.095
Consolidated Water Co. Ltd.'s (NASDAQ:CWCO) investors are due to receive a payment of $0.095 per share on 30th of April. The dividend yield is 1.3% based on this payment, which is a little bit low compared to the other companies in the industry.
View our latest analysis for Consolidated Water
Consolidated Water's Earnings Easily Cover The Distributions
It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. Before making this announcement, Consolidated Water was paying a whopping 115% as a dividend, but this only made up 24% of its overall earnings. A cash payout ratio this high could put the dividend under pressure and force the company to reduce it in the future if it were to run into tough times.
EPS is set to fall by 28.0% over the next 12 months. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 36%, which is comfortable for the company to continue in the future.
Consolidated Water Has A Solid Track Record
The company has an extended history of paying stable dividends. The dividend has gone from an annual total of $0.30 in 2014 to the most recent total annual payment of $0.38. This works out to be a compound annual growth rate (CAGR) of approximately 2.4% a year over that time. Dividends have grown relatively slowly, which is not great, but some investors may value the relative consistency of the dividend.
The Dividend Looks Likely To Grow
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. We are encouraged to see that Consolidated Water has grown earnings per share at 20% per year over the past five years. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.
Our Thoughts On Consolidated Water's Dividend
Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. We would probably look elsewhere for an income investment.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Case in point: We've spotted 2 warning signs for Consolidated Water (of which 1 is concerning!) you should know about. Is Consolidated Water not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
