NASDAQ:TSCO) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. Ex-dividend means that investors that purchase the stock on or after the 21st of August will not receive this dividend, which will be paid on the 9th of September.” data-reactid=”28″>Readers hoping to buy Tractor Supply Company (NASDAQ:TSCO) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. Ex-dividend means that investors that purchase the stock on or after the 21st of August will not receive this dividend, which will be paid on the 9th of September.
Tractor Supply’s next dividend payment will be US$0.40 per share, and in the last 12 months, the company paid a total of US$1.60 per share. Calculating the last year’s worth of payments shows that Tractor Supply has a trailing yield of 1.1% on the current share price of $148.6. If you buy this business for its dividend, you should have an idea of whether Tractor Supply’s dividend is reliable and sustainable. That’s why we should always check whether the dividend payments appear sustainable, and if the company is growing.
Check out our latest analysis for Tractor Supply ” data-reactid=”30″>Check out our latest analysis for Tractor Supply
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. Tractor Supply has a low and conservative payout ratio of just 24% of its income after tax. A useful secondary check can be to evaluate whether Tractor Supply generated enough free cash flow to afford its dividend. The good news is it paid out just 13% 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.
here to see the company’s payout ratio, plus analyst estimates of its future dividends.” data-reactid=”37″>Click here to see the company’s payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Fortunately for readers, Tractor Supply’s earnings per share have been growing at 17% a year for the past five years. The company has managed to grow earnings at a rapid rate, while reinvesting most of the profits within the business. Fast-growing businesses that are reinvesting heavily are enticing from a dividend perspective, especially since they can often increase the payout ratio later.
Another key way to measure a company’s dividend prospects is by measuring its historical rate of dividend growth. Tractor Supply has delivered an average of 28% per year annual increase in its dividend, based on the past 10 years of dividend payments. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.
The Bottom Line
Has Tractor Supply got what it takes to maintain its dividend payments? We love that Tractor Supply is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. These characteristics suggest the company is reinvesting in growing its business, while the conservative payout ratio also implies a reduced risk of the dividend being cut in the future. Tractor Supply looks solid on this analysis overall, and we’d definitely consider investigating it more closely.
3 warning signs for Tractor Supply you should know about.” data-reactid=”55″>So while Tractor Supply looks good from a dividend perspective, it’s always worthwhile being up to date with the risks involved in this stock. Every company has risks, and we’ve spotted 3 warning signs for Tractor Supply you should know about.
a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.” data-reactid=”60″>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.
Get in touch with us directly. Alternatively, email [email protected].” data-reactid=”61″>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.