NYSE:CTL) is about to trade ex-dividend in the next 3 days. You will need to purchase shares before the 28th of August to receive the dividend, which will be paid on the 11th of September.” data-reactid=”28″ type=”text”>CenturyLink, Inc. (NYSE:CTL) is about to trade ex-dividend in the next 3 days. You will need to purchase shares before the 28th of August to receive the dividend, which will be paid on the 11th of September.
CenturyLink’s next dividend payment will be US$0.25 per share, and in the last 12 months, the company paid a total of US$1.00 per share. Based on the last year’s worth of payments, CenturyLink has a trailing yield of 9.1% on the current stock price of $11.01. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. We need to see whether the dividend is covered by earnings and if it’s growing.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable – hardly an ideal situation. Its dividend payout ratio is 88% of profit, which means the company is paying out a majority of its earnings. The relatively limited profit reinvestment could slow the rate of future earnings growth. We’d be concerned if earnings began to decline. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. It distributed 37% of its free cash flow as dividends, a comfortable payout level for most companies.
It’s positive to see that CenturyLink’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.
here to see the company’s payout ratio, plus analyst estimates of its future dividends.” data-reactid=”37″ type=”text”>Click here to see the company’s payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Companies with falling earnings are riskier for dividend shareholders. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That’s why it’s not ideal to see CenturyLink’s earnings per share have been shrinking at 3.6% a year over the previous five years.
Many investors will assess a company’s dividend performance by evaluating how much the dividend payments have changed over time. CenturyLink has seen its dividend decline 9.8% per annum on average over the past 10 years, which is not great to see. It’s never nice to see earnings and dividends falling, but at least management has cut the dividend rather than potentially risk the company’s health in an attempt to maintain it.
To Sum It Up
Is CenturyLink worth buying for its dividend? We’re not enthused by the declining earnings per share, although at least the company’s payout ratio is within a reasonable range, meaning it may not be at imminent risk of a dividend cut. In summary, it’s hard to get excited about CenturyLink from a dividend perspective.
3 warning signs for CenturyLink (of which 2 are concerning!) you should know about.” data-reactid=”55″ type=”text”>If you want to look further into CenturyLink, it’s worth knowing the risks this business faces. Every company has risks, and we’ve spotted 3 warning signs for CenturyLink (of which 2 are concerning!) you should know about.
a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.” data-reactid=”56″ type=”text”>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.
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.