Camping World Holdings, Inc. (NYSE:CWH) stock is about to trade ex-dividend in four days. Ex-dividend means that investors that purchase the stock on or after the 11th of September will not receive this dividend, which will be paid on the 28th of September.
Camping World Holdings’s next dividend payment will be US$0.17 per share, and in the last 12 months, the company paid a total of US$0.68 per share. Looking at the last 12 months of distributions, Camping World Holdings has a trailing yield of approximately 2.2% on its current stock price of $30.47. If you buy this business for its dividend, you should have an idea of whether Camping World Holdings’s dividend is reliable and sustainable. That’s why we should always check whether the dividend payments appear sustainable, and if the company is growing.
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Camping World Holdings reported a loss after tax last year, which means it’s paying a dividend despite being unprofitable. While this might be a one-off event, this is unlikely to be sustainable in the long term. With the recent loss, it’s important to check if the business generated enough cash to pay its dividend. If Camping World Holdings didn’t generate enough cash to pay the dividend, then it must have either paid from cash in the bank or by borrowing money, neither of which is sustainable in the long term. Luckily it paid out just 1.9% of its free cash flow last year.
Have Earnings And Dividends Been Growing?
Businesses with shrinking earnings are tricky from a dividend perspective. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Camping World Holdings reported a loss last year, and the general trend suggests its earnings have also been declining in recent years, making us wonder if the dividend is at risk.
Many investors will assess a company’s dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, four years ago, Camping World Holdings has lifted its dividend by approximately 21% a year on average.
Should investors buy Camping World Holdings for the upcoming dividend? First, it’s not great to see the company paying a dividend despite being loss-making over the last year. On the plus side, the dividend was covered by free cash flow.” Overall it doesn’t look like the most suitable dividend stock for a long-term buy and hold investor.
Although, if you’re still interested in Camping World Holdings and want to know more, you’ll find it very useful to know what risks this stock faces. For example, Camping World Holdings has 3 warning signs (and 1 which is potentially serious) we think you should know about.
If you’re in the market for dividend stocks, we recommend checking our list of top 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.