Crown Point Energy Inc. (CVE:CWV) stock is about to trade ex-dividend in 3 days time. This means that investors who purchase shares on or after the 12th of September will not receive the dividend, which will be paid on the 30th of September.
Crown Point Energy's next dividend payment will be US$0.025 per share, and in the last 12 months, the company paid a total of US$0.04 per share. Based on the last year's worth of payments, Crown Point Energy stock has a trailing yield of around 8.6% on the current share price of CA$0.61. If you buy this business for its dividend, you should have an idea of whether Crown Point Energy's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Crown Point Energy paid out just 12% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That's why it's comforting to see Crown Point Energy's earnings have been skyrocketing, up 38% per annum for the past five years. With earnings per share growing rapidly and the company sensibly reinvesting almost all of its profits within the business, Crown Point Energy looks like a promising growth company.
This is Crown Point Energy's first year of paying a dividend, which is exciting for shareholders - but it does mean there's no dividend history to examine.
The Bottom Line
Is Crown Point Energy worth buying for its dividend? We love that Crown Point Energy is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. These characteristics suggest the company is reinvesting in growing its business, while the conservative payout ratio also implies a reduced risk of the dividend being cut in the future. There's a lot to like about Crown Point Energy, and we would prioritise taking a closer look at it.
Keen to explore more data on Crown Point Energy's financial performance? Check out our visualisation of its historical revenue and earnings growth.
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.
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