Income Investors Should Know The Class Limited (ASX:CL1) Ex-Dividend Date
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Shares of Class Limited (ASX:CL1) will begin trading ex-dividend in 2 days. To qualify for the dividend check of AU$0.025 per share, investors must have owned the shares prior to 20 February 2019, which is the last day the company’s management will finalize their list of shareholders to which they will send dividend payments. Should you diversify into Class and boost your portfolio income stream? Well, keep on reading because today, I’m going to look at the latest data and analyze the stock and its dividend property in further detail.
View our latest analysis for Class
How I analyze a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
Is their annual yield among the top 25% of dividend payers?
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?
Will it be able to continue to payout at the current rate in the future?
Does Class pass our checks?
The current trailing twelve-month payout ratio for the stock is 67%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a payout ratio of 65% which, assuming the share price stays the same, leads to a dividend yield of around 3.8%. Furthermore, EPS is forecasted to fall to A$0.074 in the upcoming year.
If you want to dive deeper into the sustainability of a certain payout ratio, you may wish to consider the cash flow of the business. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
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. Unfortunately, it is really too early to view Class as a dividend investment. It has only been consistently paying dividends for 3 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
Relative to peers, Class has a yield of 3.4%, which is high for Software stocks but still below the market’s top dividend payers.
Next Steps:
If you are building an income portfolio, then Class is a complicated choice since it has some positive aspects as well as negative ones. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. 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. Below, I’ve compiled three important aspects you should further research:
Future Outlook: What are well-informed industry analysts predicting for CL1’s future growth? Take a look at our free research report of analyst consensus for CL1’s outlook.
Valuation: What is CL1 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 CL1 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.
