NASDAQ:PCAR) is about to go ex-dividend in the next 4 days. You can purchase shares before the 10th of August in order to receive the dividend, which the company will pay on the 1st of September.” data-reactid=”28″>It looks like PACCAR Inc (NASDAQ:PCAR) is about to go ex-dividend in the next 4 days. You can purchase shares before the 10th of August in order to receive the dividend, which the company will pay on the 1st of September.
PACCAR’s next dividend payment will be US$0.32 per share. Last year, in total, the company distributed US$3.58 to shareholders. Calculating the last year’s worth of payments shows that PACCAR has a trailing yield of 4.2% on the current share price of $84.91. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to check whether the dividend payments are covered, and if earnings are growing.
Check out our latest analysis for PACCAR ” data-reactid=”30″>Check out our latest analysis for PACCAR
If a company pays out more in dividends than it earned, then the dividend might become unsustainable – hardly an ideal situation. Fortunately PACCAR’s payout ratio is modest, at just 27% of profit. 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 distributed 37% of its free cash flow as dividends, a comfortable payout level for most companies.
It’s positive to see that PACCAR’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″>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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. This is why it’s a relief to see PACCAR earnings per share are up 4.4% per annum over the last five years. Earnings per share growth in recent times has not been a standout. Yet there are several ways to grow the dividend, and one of them is simply that the company may choose to pay out more of its earnings as dividends.
Another key way to measure a company’s dividend prospects is by measuring its historical rate of dividend growth. Since the start of our data, 10 years ago, PACCAR has lifted its dividend by approximately 26% a year on average. It’s encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.
To Sum It Up
From a dividend perspective, should investors buy or avoid PACCAR? Earnings per share growth has been growing somewhat, and PACCAR is paying out less than half its earnings and cash flow as dividends. This is interesting for a few reasons, as it suggests management may be reinvesting heavily in the business, but it also provides room to increase the dividend in time. It might be nice to see earnings growing faster, but PACCAR is being conservative with its dividend payouts and could still perform reasonably over the long run. Overall we think this is an attractive combination and worthy of further research.
3 warning signs for PACCAR that you should be aware of before investing in their shares.” data-reactid=”55″>In light of that, while PACCAR has an appealing dividend, it’s worth knowing the risks involved with this stock. To help with this, we’ve discovered 3 warning signs for PACCAR that you should be aware of before investing in their shares.
a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.” data-reactid=”60″>We wouldn’t recommend just buying the first dividend stock you see, though. Here’s a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
Get in touch with us directly. Alternatively, email [email protected].” data-reactid=”61″>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.
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