Yahoo Finance Here's What We Like About North American Construction Group's (TSE:NOA) Upcoming Dividend
Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see North American Construction Group Ltd. (TSE:NOA) is about to trade ex-dividend in the next 4 days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Therefore, if you purchase North American Construction Group's shares on or after the 26th of May, you won't be eligible to receive the dividend, when it is paid on the 8th of July.
The company's next dividend payment will be CA$0.08 per share, on the back of last year when the company paid a total of CA$0.32 to shareholders. Calculating the last year's worth of payments shows that North American Construction Group has a trailing yield of 2.0% on the current share price of CA$15.64. If you buy this business for its dividend, you should have an idea of whether North American Construction Group's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.
Check out our latest analysis for North American Construction Group
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. North American Construction Group has a low and conservative payout ratio of just 12% of its income after tax. A useful secondary check can be to evaluate whether North American Construction Group generated enough free cash flow to afford its dividend. What's good is that dividends were well covered by free cash flow, with the company paying out 12% of its cash flow last year.
It's positive to see that North American Construction Group'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.
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. That's why it's comforting to see North American Construction Group's earnings have been skyrocketing, up 39% per annum for the past five years. With earnings per share growing rapidly and the company sensibly reinvesting almost all of its profits within the business, North American Construction Group looks like a promising growth company.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, eight years ago, North American Construction Group has lifted its dividend by approximately 19% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.
To Sum It Up
Is North American Construction Group an attractive dividend stock, or better left on the shelf? North American Construction Group has been growing earnings at a rapid rate, and has a conservatively low payout ratio, implying that it is reinvesting heavily in its business; a sterling combination. Overall we think this is an attractive combination and worthy of further research.
In light of that, while North American Construction Group has an appealing dividend, it's worth knowing the risks involved with this stock. For example, North American Construction Group has 4 warning signs (and 1 which is a bit unpleasant) we think 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.
