【is john wick 4 on redbox】What To Know Before Buying Canacol Energy Ltd (TSE:CNE) For Its Dividend
Is Canacol Energy Ltd (
TSE:CNE
) a good dividend stock?is john wick 4 on redbox How can we tell? Dividend paying companies with growing earnings can be highly rewarding in the long term. On the other hand, investors have been known to buy a stock because of its yield, and then lose money if the company's dividend doesn't live up to expectations.
Some simple analysis can offer a lot of insights when buying a company for its dividend, and we'll go through this below.
Explore this interactive chart for our latest analysis on Canacol Energy!
TSX:CNE Historical Dividend Yield, January 1st 2020
Payout ratios
Dividends are usually paid out of company earnings. If a company is paying more than it earns, then the dividend might become unsustainable - hardly an ideal situation. Comparing dividend payments to a company's net profit after tax is a simple way of reality-checking whether a dividend is sustainable. While Canacol Energy pays a dividend, it reported a loss over the last year. A medium payout ratio strikes a good balance between paying dividends, and keeping enough back to invest in the business. One of the risks is that management reinvests the retained capital poorly instead of paying a higher dividend.
Is Canacol Energy's Balance Sheet Risky?
As Canacol Energy has a meaningful amount of debt, we need to check its balance sheet to see if the company might have debt risks. A rough way to check this is with these two simple ratios: a) net debt divided by EBITDA (earnings before interest, tax, depreciation and amortisation), and b) net interest cover. Net debt to EBITDA measures total debt load relative to company earnings (lower = less debt), while net interest cover measures the ability to pay interest on the debt (higher = greater ability to pay interest costs). With net debt of 2.11 times its EBITDA, Canacol Energy's debt burden is within a normal range for most listed companies.
Net interest cover can be calculated by dividing earnings before interest and tax (EBIT) by the company's net interest expense. Interest cover of 3.06 times its interest expense is starting to become a concern for Canacol Energy, and be aware that lenders may place additional restrictions on the company as well.
Consider getting
our latest analysis on Canacol Energy's financial position here.
Dividend Volatility
From the perspective of an income investor who wants to earn dividends for many years, there is not much point buying a stock if its dividend is regularly cut or is not reliable. This company has been paying a dividend for less than 2 years, which we think is too soon to consider it a reliable dividend stock. Its most recent annual dividend was US$0.16 per share.
Story continues
Modest dividend growth is good to see, especially with the payments being relatively stable. However, the payment history is relatively short and we wouldn't want to rely on this dividend too much.
Dividend Growth Potential
The other half of the dividend investing equation is evaluating whether earnings per share (EPS) are growing. Growing EPS can help maintain or increase the purchasing power of the dividend over the long run. It's good to see Canacol Energy has been growing its earnings per share at 14% a year over the past five years. Earnings per share have been growing at a good rate, and the company is paying less than half its earnings as dividends. We generally think this is an attractive combination, as it permits further reinvestment in the business.
Conclusion
To summarise, shareholders should always check that Canacol Energy's dividends are affordable, that its dividend payments are relatively stable, and that it has decent prospects for growing its earnings and dividend. We're glad to see Canacol Energy has a low payout ratio, as this suggests earnings are being reinvested in the business. Next, earnings growth has been good, but unfortunately the company has not been paying dividends as long as we'd like. Overall, we think there are a lot of positives to Canacol Energy from a dividend perspective.
Earnings growth generally bodes well for the future value of company dividend payments. See if the 5 Canacol Energy analysts we track are forecasting continued growth with our
free
report on analyst estimates for the company
.
Looking for more high-yielding dividend ideas? Try our
curated list of dividend stocks with a yield above 3%.
If you spot an error that warrants correction, please contact the editor at
. 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. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
View comments
-
FOREX-Dollar wallows near 2 1/2-year low on vaccine, stimulus optimismPacific Ridge Receives $1.2 Million Payment from BMCGeneral Electric Rises 3%Divorce Client's Legal Mal Claims Against Manhattan Law Firm FailJPMorgan Increases Stake in China Securities Venture to 71%States' Settlement With Career Education Corp. Wipes Out $494M in Student DebtOver 900 Retailers Now Accepting Bitcoin CashDoes Corby Spirit and Wine Limited’s (TSE:CSW.A) Recent Track Record Look Strong?JPMorgan Agrees To Acquire Tax-Smart Fintech Startup 55ipDon’t Sell SORIL Infra Resources Limited (NSE:SORILINFRA) Before You Read This
下一篇:LATAM Airlines Group: Q1 Earnings Insights
- ·Glencore commits to net zero emissions by 2050
- ·AP Top Extended Financial Headlines at 10:55 p.m. EST
- ·What Percentage Of Progressive Planet Solutions Inc (CVE:PLAN) Shares Do Insiders Own?
- ·7 New Year Resolutions Images to Kick Off 2019
- ·'Unsustainable': Mexico's Pemex buckling under crushing pension debt
- ·Have Insiders Been Buying Ease2pay N.V. (AMS:EAS2P) Shares This Year?
- ·Greece to extend bank holiday beyond Wednesday: government source
- ·Should You Be Holding TrueCar Inc (TRUE) Right Now?
- ·Harvard and Yale Are No Match for the Bears
- ·BRIEF-Black Peony's Shareholders To Unload Up To 6.0 Pct Stake Between March 4 And Aug 31
- ·What Should You Know About The Future Of AstraZeneca PLC’s (LON:AZN)?
- ·A Note On Black Knight, Inc.’s (NYSE:BKI) ROE and Debt To Equity
- ·What Kind Of Investors Own Most Of IBI Group Inc. (TSE:IBG)?
- ·LyondellBasell: 4Q Earnings Snapshot
- ·Do Directors Own Luk Hing Entertainment Group Holdings Limited (HKG:8052) Shares?
- ·U.S. wins WTO ruling on Chinese grains; decision may also affect India
- ·Goodfood’s Strong Growth Continues as Its Active Subscribers Count Increases 33% to Reach 306,000
- ·Why Palo Alto Networks Has Spent Over $1 Billion on Acquisitions
- ·Mark Zuckerberg's vision of the future is full of artificial intelligence, telepathy, and virtual reality
- ·UPDATE 1-Toshiba likely to miss quarterly earnings deadline for 3rd time-sources
- ·Great Ajax (AJX) Misses Q4 Earnings and Revenue Estimates
- ·These Are The Issues Employers Are Most Worried About in 2019
- ·GLOBAL MARKETS-Asian shares off 4-month high as China data disappoints
- ·Calculating The Fair Value Of Wayland Group (CNSX:WAYL)
- ·Manganese X Receives Eligibility for DTC Trading in the U.S.
- ·Kellogg Beats on Earnings, Cereals Let Down Sales
- ·California ballot initiative on gig workers could be among costliest in state's history
- ·President Joe Biden Announces New Plan of Action to Aid with Student Debt Relief
- ·The Hague Evidence Convention’s Rarely-Used Private Commissioner Provision May Be a Viable Option for Cross-Border Discovery
- ·How Did That ‘Dungeons & Dragons’ Surprise Cameo Happen? Thank a Failed 2005 Fox Sitcom
- ·ROCE Insights For Facebook
- ·Christian Pulisic moves to Chelsea London but will return on a loan back to Borussia Dortmund until the end of the season 2018/2019
- ·Should You Be Concerned With Standex International Corporation’s (NYSE:SXI) -15% Earnings Drop?
- ·Australia's LNG exports slip behind Qatar in January on outage
- ·Ambu A/S: Interim report for Q2 2019/20 and for the period 1 October 2019 to 31 March 2020
- ·Wall Street Transcript Interview with John Edwards, Director and Senior Equity Research Analyst at Credit Suisse Group: Strong E&P Levels Lay Base for Continued MLP Appreciation