On the 05 June 2018, CA Inc (NASDAQ:CA) will be paying shareholders an upcoming dividend amount of $0.26 per share. However, investors must have bought the company’s stock before 16 May 2018 in order to qualify for the payment. That means you have only 7 days left! Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into CA’s latest financial data to analyse its dividend attributes. Check out our latest analysis for CA
5 checks you should do on a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
- Is its annual yield among the top 25% of dividend-paying companies?
- Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
- Has it increased its dividend per share amount over the past?
- Can it afford to pay the current rate of dividends from its earnings?
- Will the company be able to keep paying dividend based on the future earnings growth?
How well does CA fit our criteria?
The current trailing twelve-month payout ratio for CA is 100.78%, meaning the dividend is not sufficiently covered by its earnings. In the near future, analysts are predicting a more sensible payout ratio of 34.66%, leading to a dividend yield of around 2.98%. In addition to this, EPS should increase to $1.73, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. In the case of CA it has increased its DPS from $0.16 to $1.02 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock. In terms of its peers, CA has a yield of 2.95%, which is high for Software stocks but still below the market’s top dividend payers.
Taking into account the dividend metrics, CA 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. There are three essential aspects you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for CA’s future growth? Take a look at our free research report of analyst consensus for CA’s outlook.
- Valuation: What is CA 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 CA 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 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.