Yahoo Finance Income Investors Should Know That Cal-Maine Foods, Inc. (NASDAQ:CALM) Goes Ex-Dividend Soon
It looks like Cal-Maine Foods, Inc. (NASDAQ:CALM) is about to go ex-dividend in the next 4 days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. This means that investors who purchase Cal-Maine Foods' shares on or after the 30th of April will not receive the dividend, which will be paid on the 16th of May.
The company's next dividend payment will be US$0.997 per share, and in the last 12 months, the company paid a total of US$5.17 per share. Based on the last year's worth of payments, Cal-Maine Foods has a trailing yield of 8.8% on the current stock price of US$58.82. 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! As a result, readers should always check whether Cal-Maine Foods has been able to grow its dividends, or if the dividend might be cut.
See our latest analysis for Cal-Maine Foods
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. That's why it's good to see Cal-Maine Foods paying out a modest 33% of its earnings. 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. It paid out more than half (61%) of its free cash flow in the past year, which is within an average range for most companies.
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.
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. If earnings fall far enough, the company could be forced to cut its dividend. Fortunately for readers, Cal-Maine Foods's earnings per share have been growing at 17% a year for the past five years. Cal-Maine Foods is paying out a bit over half its earnings, which suggests the company is striking a balance between reinvesting in growth, and paying dividends. This is a reasonable combination that could hint at some further dividend increases in the future.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Cal-Maine Foods has delivered an average of 44% 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
Should investors buy Cal-Maine Foods for the upcoming dividend? From a dividend perspective, we're encouraged to see that earnings per share have been growing, the company is paying out less than half of its earnings, and a bit over half its free cash flow. There's a lot to like about Cal-Maine Foods, and we would prioritise taking a closer look at it.
While it's tempting to invest in Cal-Maine Foods for the dividends alone, you should always be mindful of the risks involved. Every company has risks, and we've spotted 4 warning signs for Cal-Maine Foods (of which 1 is a bit unpleasant!) you should know about.
Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
