Over the past 10 years Carnival Corporation & Plc ( NYSE:CCL ) has grown its dividend payouts from $0.40 to $2. With a market cap of US$36b, Carnival Corporation & pays out 47% of its earnings, leading to a 4.0% yield. Let me elaborate on you why the stock stands out for income investors like myself.
What Is A Dividend Rock Star?
It is a stock that pays a reliable and steady dividend over the past decade, at a rate that is competitive relative to the other dividend-paying companies on the market. More specifically:
- Its annual yield is among the top 25% of dividend payers
- It has paid dividend every year without dramatically reducing payout in the past
- Its dividend per share amount has increased over the past
- It can afford to pay the current rate of dividends from its earnings
- It is able to continue to payout at the current rate in the future
High Yield And Dependable
Carnival Corporation &'s dividend yield stands at 4.0%, which is high for Hospitality stocks. But the real reason Carnival Corporation & stands out is because it has a proven track record of continuously paying out this level of dividends, from earnings, to shareholders and can be expected to continue paying in the future. This is a highly desirable trait for a stock holding if you're investor who wants a robust cash inflow from your portfolio over a long period of time.
If there's one type of stock you want to be reliable, it's dividend stocks and their stable income-generating ability. In the case of CCL it has increased its DPS from $0.40 to $2 in the past 10 years. It has also been paying out dividend consistently during this time, as you'd expect for a company increasing its dividend levels. This is an impressive feat, which makes CCL a true dividend rockstar.
Carnival Corporation & has a trailing twelve-month payout ratio of 47%, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect CCL's payout to fall to 41% of its earnings. Assuming a constant share price, this equates to a dividend yield of 4.1%. However, EPS should increase to $4.52, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow . Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.
Carnival Corporation & ticks all the boxes for what I look for in a dividend stock. If you are looking to build an income focused portfolio, this could be one to include. However, given this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company's fundamentals and underlying business before making an investment decision. Below, I've compiled three pertinent aspects you should further examine:
- Future Outlook : What are well-informed industry analysts predicting for CCL’s future growth? Take a look at our free research report of analyst consensus for CCL’s outlook.
- Valuation : What is CCL worth today? Even if the stock is a cash cow, it's not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether CCL is currently mispriced by the market.
- Other Dividend Rockstars : Are there strong dividend payers with better fundamentals out there? Check out our free list of these great stocks here .
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org . 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. Thank you for reading.