Should CTI Logistics Limited (ASX:CLX) Be Part Of Your Portfolio?
A sizeable part of portfolio returns can be produced by dividend stocks due to their contribution to compounding returns in the long run. Historically, CTI Logistics Limited (ASX:CLX) has paid dividends to shareholders, and these days it yields 3.9%. Let’s dig deeper into whether CTI Logistics should have a place in your portfolio.
Check out our latest analysis for CTI Logistics
5 checks you should use to assess a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
Does it pay an annual yield higher than 75% of dividend payers?
Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
Has dividend per share amount increased over the past?
Is its earnings sufficient to payout dividend at the current rate?
Will it have the ability to keep paying its dividends going forward?
Does CTI Logistics pass our checks?
The current trailing twelve-month payout ratio for the stock is 71.7%, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect CLX’s payout to fall to 43.7% of its earnings, which leads to a dividend yield of around 4.0%.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Although CLX’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Shareholders would have seen a few years of reduced payments in this time.
In terms of its peers, CTI Logistics has a yield of 3.9%, which is high for Logistics stocks but still below the market’s top dividend payers.
Next Steps:
Considering the dividend attributes we analyzed above, CTI Logistics is definitely worth keeping an eye on for someone looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. There are three important aspects you should look at:
Future Outlook: What are well-informed industry analysts predicting for CLX’s future growth? Take a look at our free research report of analyst consensus for CLX’s outlook.
Valuation: What is CLX 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 CLX is currently mispriced by the market.
Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
