short research study? Help shape the future of investing tools and earn a $40 gift card!” data-reactid=”19″>Want to participate in a short research study? Help shape the future of investing tools and earn a $40 gift card!
NYSE:CMRE) is about to trade ex-dividend in the next 4 days. This means that investors who purchase shares on or after the 21st of July will not receive the dividend, which will be paid on the 7th of August.” data-reactid=”20″>Costamare Inc. (NYSE:CMRE) is about to trade ex-dividend in the next 4 days. This means that investors who purchase shares on or after the 21st of July will not receive the dividend, which will be paid on the 7th of August.
Costamare’s next dividend payment will be US$0.10 per share, on the back of last year when the company paid a total of US$0.40 to shareholders. Looking at the last 12 months of distributions, Costamare has a trailing yield of approximately 8.0% on its current stock price of $4.99. We love seeing companies pay a dividend, but it’s also important to be sure that laying the golden eggs isn’t going to kill our golden goose! So we need to check whether the dividend payments are covered, and if earnings are growing.
Check out our latest analysis for Costamare ” data-reactid=”22″>Check out our latest analysis for Costamare
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. Costamare paid out a comfortable 46% of its profit last year. 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. Fortunately, it paid out only 31% of its free cash flow in the past year.
It’s positive to see that Costamare’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.
here to see the company’s payout ratio, plus analyst estimates of its future dividends.” data-reactid=”25″>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. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Readers will understand then, why we’re concerned to see Costamare’s earnings per share have dropped 8.7% a year over the past five years. Such a sharp decline casts doubt on the future sustainability of the dividend.
Many investors will assess a company’s dividend performance by evaluating how much the dividend payments have changed over time. Costamare has seen its dividend decline 8.8% per annum on average over the past ten years, which is not great to see. It’s never nice to see earnings and dividends falling, but at least management has cut the dividend rather than potentially risk the company’s health in an attempt to maintain it.
The Bottom Line
Is Costamare an attractive dividend stock, or better left on the shelf? 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. In summary, while it has some positive characteristics, we’re not inclined to race out and buy Costamare today.
3 warning signs for Costamare (1 is concerning!) that deserve your attention before investing in the shares.” data-reactid=”43″>So while Costamare looks good from a dividend perspective, it’s always worthwhile being up to date with the risks involved in this stock. For example, we’ve found 3 warning signs for Costamare (1 is concerning!) that deserve your attention before investing in the shares.
a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.” data-reactid=”48″>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.
Get in touch with us directly. Alternatively, email [email protected].” data-reactid=”49″>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.