Should Income Investors Buy CA Inc (NASDAQ:CA) Before Its Ex-Dividend?
Attention dividend hunters! CA Inc (NASDAQ:CA) will be distributing its dividend of US$0.26 per share on the 11 September 2018, and will start trading ex-dividend in 2 days time on the 22 August 2018. Is this future income a persuasive enough catalyst for investors to think about CA 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.
Check out our latest analysis for CA
5 checks you should do on a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
Does it pay an annual yield higher than 75% of dividend payers?
Has it paid dividend every year without dramatically reducing payout in the past?
Has it increased its dividend per share amount 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 CA fit our criteria?
The current trailing twelve-month payout ratio for CA is 92.09%, meaning the dividend is not sufficiently covered by its 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.
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.
Relative to peers, CA has a yield of 2.34%, which is high for Software stocks but still below the market’s top dividend payers.
Next Steps:
If CA is in your portfolio for cash-generating reasons, there may be better alternatives out there. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. There are three important 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.
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 editorial-team@simplywallst.com.
