Shares of Carpenter Technology Corporation (NYSE:CRS) will begin trading ex-dividend in 4 days. To qualify for the dividend check of US$0.20 per share, investors must have owned the shares prior to 04 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 Carpenter Technology 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.
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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:
- Is it the top 25% annual dividend yield payer?
- Does it consistently pay out dividends without missing a payment of significantly cutting payout?
- Has dividend per share amount increased 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?
Does Carpenter Technology pass our checks?
Carpenter Technology has a trailing twelve-month payout ratio of 18%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect CRS’s payout to remain around the same level at 18% of its earnings. Assuming a constant share price, this equates to a dividend yield of around 1.8%. In addition to this, EPS is forecasted to fall to $3.53 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. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.
If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. CRS has increased its DPS from $0.72 to $0.80 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock.
Relative to peers, Carpenter Technology produces a yield of 1.8%, which is on the low-side for Metals and Mining stocks.
Keeping in mind the dividend characteristics above, Carpenter Technology 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 pertinent aspects you should look at:
- Future Outlook: What are well-informed industry analysts predicting for CRS’s future growth? Take a look at our free research report of analyst consensus for CRS’s outlook.
- Valuation: What is CRS 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 CRS 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 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 email@example.com.