Only 4 Days Left Until Cabot Microelectronics Corporation (NASDAQ:CCMP) Trades Ex-Dividend,
If you are interested in cashing in on Cabot Microelectronics Corporation’s (NASDAQ:CCMP) upcoming dividend of US$0.40 per share, you only have 4 days left to buy the shares before its ex-dividend date, 05 October 2018, in time for dividends payable on the 30 October 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine Cabot Microelectronics’s latest financial data to analyse its dividend characteristics.
Check out our latest analysis for Cabot Microelectronics
5 checks you should use to assess a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
Is it the top 25% annual dividend yield payer?
Does it consistently pay out dividends without missing a payment of significantly cutting payout?
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?
Does Cabot Microelectronics pass our checks?
The company currently pays out 34.6% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. However, going forward, analysts expect CCMP’s payout to fall to 26.9% of its earnings, which leads to a dividend yield of 1.4%. However, EPS should increase to $5.11, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
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 there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. The reality is that it is too early to consider Cabot Microelectronics 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.
Compared to its peers, Cabot Microelectronics generates a yield of 1.6%, which is on the low-side for Semiconductor stocks.
Next Steps:
If Cabot Microelectronics 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, 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 fundamental factors you should look at:
Valuation: What is CCMP 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 CCMP is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Cabot Microelectronics’s board and the CEO’s back ground.
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.
