Important news for shareholders and potential investors in Culp Inc (NYSE:CULP): The dividend payment of $0.09 per share will be distributed into shareholder on 16 January 2018, and the stock will begin trading ex-dividend at an earlier date, 29 December 2017. Is this future income a persuasive enough catalyst for investors to think about Culp as an investment today? Below, I’m going to look at the latest data and analyze the stock and its dividend property in further detail. See our latest analysis for Culp
How I analyze a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
- Is its annual yield among the top 25% of dividend-paying companies?
- Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
- Has the amount of dividend per share grown over the past?
- Is is able to pay the current rate of dividends from its earnings?
- Will it have the ability to keep paying its dividends going forward?
How does Culp fare?
The company currently pays out 18.41% of its earnings as a dividend, meaning the dividend is sufficiently covered by earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward. 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. The reality is that it is too early to consider Culp as a dividend investment. It has only been consistently paying dividends for 6 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. Relative to peers, Culp produces a yield of 1.73%, which is high for luxury stocks but still below the low risk savings rate.
What this means for you:
Are you a shareholder? Investors may not have the best feeling about their investment in Culp right now, in terms of its dividend attributes. It may be valuable exploring other dividend stocks as alternatives to Culp or even look at high-growth stocks to supplement your steady income stocks. I encourage you to continue your research by taking a look at my interactive free list of dividend rockstars as well as high-growth stocks to potentially add to your holdings.
Are you a potential investor? Now you know to keep in mind the reason why investors should be careful investing in Culp for the dividend. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. I also recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. Check our latest free fundmental analysis to explore other aspects of Culp.
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.