Camping World Holdings, Inc. (NYSE:CWH) stock is about to trade ex-dividend in 4 days. Investors can purchase shares before the 12th of March in order to be eligible for this dividend, which will be paid on the 29th of March.
Camping World Holdings’s next dividend payment will be US$0.23 per share, on the back of last year when the company paid a total of US$0.73 to shareholders. Last year’s total dividend payments show that Camping World Holdings has a trailing yield of 2.4% on the current share price of $33.11. If you buy this business for its dividend, you should have an idea of whether Camping World Holdings’s dividend is reliable and sustainable. As a result, readers should always check whether Camping World Holdings has been able to grow its dividends, or if the dividend might be cut.
View our latest analysis for Camping World Holdings
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Camping World Holdings is paying out just 11% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. What’s good is that dividends were well covered by free cash flow, with the company paying out 3.2% of its cash flow last year.
It’s positive to see that Camping World Holdings’s dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.
Click here to see the company’s payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
When earnings decline, dividend companies become much harder to analyse and own safely. If earnings fall far enough, the company could be forced to cut its dividend. Camping World Holdings’s earnings have collapsed faster than Wile E Coyote’s schemes to trap the Road Runner; down a tremendous 69% a year over the past five years.
Many investors will assess a company’s dividend performance by evaluating how much the dividend payments have changed over time. In the last four years, Camping World Holdings has lifted its dividend by approximately 25% a year on average.
To Sum It Up
Should investors buy Camping World Holdings for the upcoming dividend? Earnings per share are down meaningfully, although at least the company is paying out a low and conservative percentage of both its earnings and cash flow. It’s definitely not great to see earnings falling, but at least there may be some buffer before the dividend needs to be cut. While it does have some good things going for it, we’re a bit ambivalent and it would take more to convince us of Camping World Holdings’s dividend merits.
With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. For example, we’ve found 3 warning signs for Camping World Holdings that we recommend you consider before investing in the business.
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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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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