We Wouldn't Be Too Quick To Buy Boise Cascade Company (NYSE:BCC) Before It Goes Ex-Dividend
Boise Cascade Company (NYSE:BCC) is about to trade ex-dividend in the next 4 days. You will need to purchase shares before the 30th of August to receive the dividend, which will be paid on the 16th of September.
Boise Cascade's next dividend payment will be US$0.09 per share. Last year, in total, the company distributed US$0.36 to shareholders. Based on the last year's worth of payments, Boise Cascade has a trailing yield of 1.2% on the current stock price of $29.77. If you buy this business for its dividend, you should have an idea of whether Boise Cascade's dividend is reliable and sustainable. As a result, readers should always check whether Boise Cascade has been able to grow its dividends, or if the dividend might be cut.
See our latest analysis for Boise Cascade
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Boise Cascade's dividend is not well covered by earnings, as the company lost money last year. This is not a sustainable state of affairs, so it would be worth investigating if earnings are expected to recover. Considering the lack of profitability, we also need to check if the company generated enough cash flow to cover the dividend payment. If Boise Cascade didn't generate enough cash to pay the dividend, then it must have either paid from cash in the bank or by borrowing money, neither of which is sustainable in the long term. What's good is that dividends were well covered by free cash flow, with the company paying out 24% of its cash flow last year.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Businesses with shrinking earnings are tricky from a dividend perspective. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Boise Cascade was unprofitable last year and, unfortunately, the general trend suggests its earnings have been in decline over the last 5 years, making us wonder if the dividend is sustainable at all.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, 2 years ago, Boise Cascade has lifted its dividend by approximately 13% a year on average.
Get our latest analysis on Boise Cascade's balance sheet health here.
The Bottom Line
Is Boise Cascade an attractive dividend stock, or better left on the shelf? We're a bit uncomfortable with it paying a dividend while being loss-making. However, we note that the dividend was covered by cash flow. With the way things are shaping up from a dividend perspective, we'd be inclined to steer clear of Boise Cascade.
Curious what other investors think of Boise Cascade? See what analysts are forecasting, with this visualisation of its historical and future estimated earnings and cash flow .
We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
