Cadence Opportunities Fund Limited (ASX:CDO) Stock Goes Ex-Dividend In Just Three Days
Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Cadence Opportunities Fund Limited (ASX:CDO) is about to go ex-dividend in just three days. The ex-dividend date generally occurs two days before the record date, which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. Meaning, you will need to purchase Cadence Opportunities Fund's shares before the 29th of September to receive the dividend, which will be paid on the 15th of October.
The company's next dividend payment will be AU$0.075 per share, on the back of last year when the company paid a total of AU$0.15 to shareholders. Based on the last year's worth of payments, Cadence Opportunities Fund has a trailing yield of 6.6% on the current stock price of AU$2.26. If you buy this business for its dividend, you should have an idea of whether Cadence Opportunities Fund's dividend is reliable and sustainable. As a result, readers should always check whether Cadence Opportunities Fund has been able to grow its dividends, or if the dividend might be cut.
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Fortunately Cadence Opportunities Fund's payout ratio is modest, at just 42% of profit.
Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.
Check out our latest analysis for Cadence Opportunities Fund
Click here to see how much of its profit Cadence Opportunities Fund paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
When earnings decline, dividend companies become much harder to analyse and own safely. If earnings fall far enough, the company could be forced to cut its dividend. Readers will understand then, why we're concerned to see Cadence Opportunities Fund's earnings per share have dropped 14% a year over the past five years. When earnings per share fall, the maximum amount of dividends that can be paid also falls.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Cadence Opportunities Fund's dividend payments are broadly unchanged compared to where they were five years ago. When earnings are declining yet the dividends are flat, typically the company is either paying out a higher portion of its earnings, or paying out of cash or debt on the balance sheet, neither of which is ideal.
To Sum It Up
Should investors buy Cadence Opportunities Fund for the upcoming dividend? Earnings per share have shrunk noticeably in recent years, although we like that the company has a low payout ratio. This could suggest a cut to the dividend may not be a major risk in the near future. It doesn't appear an outstanding opportunity, but could be worth a closer look.
With that being said, if dividends aren't your biggest concern with Cadence Opportunities Fund, you should know about the other risks facing this business. Every company has risks, and we've spotted 2 warning signs for Cadence Opportunities Fund you should know about.
If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.
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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.