Consolidated Water Co. Ltd. (NASDAQ:CWCO) has recently announced that it will be paying a dividend of $0.095 per share on July 31st. This dividend payment equates to a dividend yield of 1.5%, which is lower than the industry average.
Looking at Consolidated Water’s earnings, it appears that the company has enough coverage to sustain its dividend payments. While it would be ideal for the yield to be higher, it is important to ensure that the company can maintain its dividend payments in the long run. The last payment made by Consolidated Water was only a fraction of its earnings, but it represented a significant 137% of its cash flows. A high cash payout ratio like this could potentially put the company’s dividend at risk if it faces challenging times.
EPS is expected to decrease by 21.6% over the next year. However, if the dividend continues on its current trajectory, the payout ratio is estimated to be at a comfortable 23% for the company to sustain in the future.
Consolidated Water has a solid track record of paying dividends with minimal fluctuations. Over the past 10 years, the company has been increasing its annual distributions by 2.4% per year. While slow and steady dividend growth may not be the most exciting, the stability of dividends over the years makes it an attractive option for investors.
Investors who have held shares in Consolidated Water for a few years have benefited from consistent dividend income. The company has been growing its earnings per share at a rate of 24% annually over the last five years. With a low payout ratio and growing earnings, Consolidated Water has the flexibility and capability to increase its dividend.
In summary, while it is positive to see a consistent dividend payment from Consolidated Water, there are concerns about the sustainability of the current payout level in the long term. The company is not considered a top-tier income stock, but its stable dividend history and growth potential make it an interesting option for investors.
Investors generally prefer companies with a consistent and stable dividend policy over those with irregular payments. It is important to consider all factors before investing in a stock, including potential warning signs. If you are a dividend investor, it may be beneficial to explore high yield dividend stocks.
Valuation of Consolidated Water may be complex, but our comprehensive analysis provides insight into whether the stock is potentially over or undervalued. This analysis includes fair value estimates, risks, dividends, insider transactions, and financial health.
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This article by Simply Wall St provides commentary based on historical data and analyst forecasts in an unbiased manner. It is not financial advice and does not constitute a recommendation to buy or sell any stock. Our analysis aims to provide long-term focused insights driven by fundamental data, without factoring in the latest price-sensitive company announcements or qualitative material. Simply Wall St does not hold any positions in the mentioned stocks.