Shares of CanWel Building Materials Group Ltd (TSX:CWX) will begin trading ex-dividend in 3 days. To qualify for the dividend check of CA$0.14 per share, investors must have owned the shares prior to 28 December 2017, which is the last day the company’s management will finalize their list of shareholders to which they will send dividend payments. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at CanWel Building Materials Group’s most recent financial data to examine its dividend characteristics in more detail. Check out our latest analysis for CanWel Building Materials Group
Here’s how I find good dividend stocks
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
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Is it paying an annual yield above 75% of dividend payers?
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Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
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Has the amount of dividend per share grown over the past?
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Does earnings amply cover its dividend payments?
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Will it be able to continue to payout at the current rate in the future?
How does CanWel Building Materials Group fare?
The company currently pays out 106.04% of its earnings as a dividend, meaning the dividend is not sufficiently covered by its earnings. In the near future, analysts are predicting a payout ratio of 101.81%, leading to a dividend yield of 7.75%. Moreover, EPS is forecasted to fall to CA$0.49 in the upcoming year. 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. Not only have dividend payouts from CanWel Building Materials Group fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. This means that dividend hunters should probably steer clear of the stock, at least for now until the track record improves. In terms of its peers, CanWel Building Materials Group has a yield of 7.75%, which is high for trade distributors stocks.
What this means for you:
Are you a shareholder? You may be wondering why CanWel Building Materials Group is paying out dividends at all, instead of re-investing into the business to generate higher cash flows in the future. It may be beneficial exploring other dividend stocks as alternatives to CanWel Building Materials Group or even look at high-growth stocks to supplement your steady income stocks. I recommend continuing your research by taking a look at my interactive free list of dividend rockstars as well as high-growth stocks to potentially add to your holdings.