Yahoo Finance Charles Schwab (NYSE:SCHW) Will Pay A Dividend Of $0.25
The Charles Schwab Corporation (NYSE:SCHW) will pay a dividend of $0.25 on the 23rd of February. The dividend yield is 1.6% based on this payment, which is a little bit low compared to the other companies in the industry.
See our latest analysis for Charles Schwab
Charles Schwab's Earnings Easily Cover The Distributions
If it is predictable over a long period, even low dividend yields can be attractive. Based on the last payment, Charles Schwab was earning enough to cover the dividend, but free cash flows weren't positive. With the company not bringing in any cash, paying out to shareholders is bound to become difficult at some point.
Looking forward, earnings per share is forecast to rise by 90.4% over the next year. If the dividend continues on this path, the payout ratio could be 24% by next year, which we think can be pretty sustainable going forward.
Charles Schwab Has A Solid Track Record
The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The annual payment during the last 10 years was $0.24 in 2014, and the most recent fiscal year payment was $1.00. This implies that the company grew its distributions at a yearly rate of about 15% over that duration. Rapidly growing dividends for a long time is a very valuable feature for an income stock.
Dividend Growth May Be Hard To Achieve
The company's investors will be pleased to have been receiving dividend income for some time. However, Charles Schwab's EPS was effectively flat over the past five years, which could stop the company from paying more every year. While EPS growth is quite low, Charles Schwab has the option to increase the payout ratio to return more cash to shareholders.
In Summary
In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Charles Schwab's payments, as there could be some issues with sustaining them into the future. While Charles Schwab is earning enough to cover the payments, the cash flows are lacking. This company is not in the top tier of income providing stocks.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Just as an example, we've come across 3 warning signs for Charles Schwab you should be aware of, and 1 of them is potentially serious. If you are a dividend investor, you might also want to look at our curated list of high yield 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.
