CSX's (NASDAQ:CSX) Dividend Will Be $0.12
The board of CSX Corporation (NASDAQ:CSX) has announced that it will pay a dividend on the 13th of September, with investors receiving $0.12 per share. This payment means that the dividend yield will be 1.4%, which is around the industry average.
See our latest analysis for CSX
CSX's Payment Has Solid Earnings Coverage
We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Before making this announcement, CSX was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.
The next year is set to see EPS grow by 31.9%. If the dividend continues along recent trends, we estimate the payout ratio will be 21%, which is in the range that makes us comfortable with the sustainability of the dividend.
CSX Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2014, the annual payment back then was $0.20, compared to the most recent full-year payment of $0.48. This works out to be a compound annual growth rate (CAGR) of approximately 9.1% a year over that time. Dividends have grown at a reasonable rate over this period, and without any major cuts in the payment over time, we think this is an attractive combination as it provides a nice boost to shareholder returns.
We Could See CSX's Dividend Growing
The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that CSX has grown earnings per share at 6.2% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for CSX's prospects of growing its dividend payments in the future.
CSX Looks Like A Great Dividend Stock
In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 1 warning sign for CSX that investors need to be conscious of moving forward. Is CSX not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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