Carlisle Companies Incorporated (NYSE:CSL) shares will trade ex-dividend in 3 days. The ex-dividend date is one business day before a company’s record date, when the company determines which shareholders are entitled to a dividend. The ex-dividend date is important because the settlement process takes two full business days, so if you miss this day, you won’t appear on the company’s books on the record date. So if you buy Carlisle Companies shares on or after August 20th, you won’t be eligible to receive the dividend when it is paid on September 3rd.
The company’s next dividend payment will be $1.00 per share, following on from last year’s payout of a total of $4.00 to shareholders. Based on last year’s payments, Carlisle Companies has a yield of 1.0% on the current share price of $406.51. If you are buying this company for its dividend, you should have an idea of whether Carlisle Companies’ dividend is reliable and sustainable, so we need to check if the dividend payments are covered and if earnings are growing.
Check out our latest analysis for Carlisle Companies
Dividends are typically paid out of company profits, so if a company pays out more than it earns, there is usually a higher risk of a dividend cut. Carlisle Companies paid out just 19% of its profits last year, which we think is conservatively low and leaves plenty of room for the unexpected. However, cash flows are even more important than profits when assessing a dividend, so we need to look at whether the company generated enough cash to make the distribution. The good news is that it paid out just 15% of its free cash flow last year.
It’s positive to see that Carlisle Companies’ dividend is covered by both profits and cash flow, as this is generally a sign that the dividend is sustainable, and a lower payout ratio usually indicates a greater margin of safety before the dividend gets cut.
Click here to see the company’s payout ratio as well as analyst estimates of its future dividends.
Have earnings and dividends increased?
Companies with strong growth prospects tend to be the best dividend payers because it’s easier to increase the dividend when earnings per share are improving. If earnings fall far enough, the company could be forced to cut its dividend. That’s why it’s reassuring to see Carlisle Companies’ earnings have soared 26% per year over the past five years. Carlisle Companies’ earnings per share sprinted away like the Road Runner on track day, barely stopping for a cheeky ‘beep-beep.’ We also like that the company reinvests the majority of its profits into its business.’
Another important way to gauge a company’s dividend prospects is to measure its historical dividend growth rate. Since we began our data 10 years ago, Carlisle Companies has increased its dividend by an average of about 16% per year. It’s exciting to see that both earnings and dividends per share have grown rapidly in recent years.
The conclusion
Should investors buy or avoid Carlisle Companies from a dividend perspective? Carlisle Companies has grown its earnings at a rapid pace and has a conservatively low payout ratio, meaning the company reinvests heavily in its business; an excellent combination. Overall, we think this combination is attractive and worth further investigation.
Have you ever wondered what the future holds for Carlisle Companies? See what the six analysts we follow are forecasting with this visualization of historical and future estimated earnings and cash flows
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This Simply Wall St article is of a general nature. We comment solely on the basis of historical data and analyst forecasts, using an unbiased methodology. Our articles do not constitute financial advice. It is not a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. Our goal is to provide you with long-term analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative materials. Simply Wall St does not hold any of the stocks mentioned.
