Cardinal Health Inc (NYSE:CAH): What You Have To Know Before Buying For The Upcoming Dividend

Important news for shareholders and potential investors in Cardinal Health Inc (NYSE:CAH): The dividend payment of US$0.48 per share will be distributed into shareholder on 15 July 2018, and the stock will begin trading ex-dividend at an earlier date, 29 June 2018. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at Cardinal Health’s most recent financial data to examine its dividend characteristics in more detail. See our latest analysis for Cardinal Health

5 questions to ask before buying a dividend stock

When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:

• Is it the top 25% annual dividend yield payer?

• 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 is able to pay the current rate of dividends from its earnings?

• Will the company be able to keep paying dividend based on the future earnings growth?

NYSE:CAH Historical Dividend Yield June 26th 18

How does Cardinal Health fare?

The company currently pays out 34.24% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a payout ratio of 34.07%, leading to a dividend yield of 3.63%. Moreover, EPS is forecasted to fall to $3.86 in the upcoming year.

If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. CAH has increased its DPS from $0.56 to $1.91 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. This is an impressive feat, which makes CAH a true dividend rockstar.

Compared to its peers, Cardinal Health generates a yield of 3.53%, which is high for Healthcare stocks but still below the market’s top dividend payers.

Next Steps:

Taking into account the dividend metrics, Cardinal Health ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. Given that 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. I’ve put together three essential factors you should further research:

1. Future Outlook: What are well-informed industry analysts predicting for CAH’s future growth? Take a look at our free research report of analyst consensus for CAH’s outlook.

2. Valuation: What is CAH 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 CAH is currently mispriced by the market.

3. 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 pass 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.