Here's What We Like About Logistec's (TSE:LGT.B) Upcoming Dividend
Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Logistec Corporation (TSE:LGT.B) is about to go ex-dividend in just 4 days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Thus, you can purchase Logistec's shares before the 18th of June in order to receive the dividend, which the company will pay on the 5th of July.
The company's next dividend payment will be CA$0.10 per share, and in the last 12 months, the company paid a total of CA$0.41 per share. Based on the last year's worth of payments, Logistec has a trailing yield of 0.9% on the current stock price of CA$44.97. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether Logistec has been able to grow its dividends, or if the dividend might be cut.
View our latest analysis for Logistec
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Logistec paid out just 16% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. The good news is it paid out just 6.5% of its free cash flow in the last year.
It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
Click here to see how much of its profit Logistec paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. If earnings fall far enough, the company could be forced to cut its dividend. It's not encouraging to see that Logistec's earnings are effectively flat over the past five years. We'd take that over an earnings decline any day, but in the long run, the best dividend stocks all grow their earnings per share. Growth has been anaemic. Yet with more than 75% of its earnings being kept in the business, there is ample room to reinvest in growth or lift the payout ratio - either of which could increase the dividend.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Logistec has delivered an average of 8.2% per year annual increase in its dividend, based on the past 10 years of dividend payments.
To Sum It Up
Should investors buy Logistec for the upcoming dividend? Earnings per share have been flat over this time, but we're intrigued to see that Logistec is paying out less than half its earnings and cash flow as dividends. This is interesting for a few reasons, as it suggests management may be reinvesting heavily in the business, but it also provides room to increase the dividend in time. Generally we like to see both low payout ratios and strong earnings per share growth, but Logistec is halfway there. It's a promising combination that should mark this company worthy of closer attention.
On that note, you'll want to research what risks Logistec is facing. Every company has risks, and we've spotted 1 warning sign for Logistec you should know about.
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.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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