If you are interested in cashing in on Capital Southwest Corporation’s (NASDAQ:CSWC) upcoming dividend of US$0.89 per share, you only have 2 days left to buy the shares before its ex-dividend date, 25 June 2018, in time for dividends payable on the 02 July 2018. Is this future income a persuasive enough catalyst for investors to think about Capital Southwest 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. View out our latest analysis for Capital Southwest
How I analyze a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
- Is it the top 25% annual dividend yield payer?
- 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?
- Is is able to pay the current rate of dividends from its earnings?
- Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How well does Capital Southwest fit our criteria?
The current trailing twelve-month payout ratio for the stock is 40.48%, which means that the dividend is covered by earnings. Furthermore, analysts are forecasting the payout ratio to exceed earnings going forward, leading to a future of uncertainty around the stability of CSWC’s dividend income.
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. Although CSWC’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Investors have seen reductions in the dividend per share in the past, although, it has picked up again.
In terms of its peers, Capital Southwest generates a yield of 6.08%, which is high for Capital Markets stocks.
Keeping in mind the dividend characteristics above, Capital Southwest is definitely worth considering for investors looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. I’ve put together three relevant factors you should further research:
- Future Outlook: What are well-informed industry analysts predicting for CSWC’s future growth? Take a look at our free research report of analyst consensus for CSWC’s outlook.
- Historical Performance: What has CSWC’s returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- 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.