Carlisle Companies Incorporated (NYSE:CSL) is about to trade ex-dividend in the next 4 days.  The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend.  The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date.   Thus, you can purchase Carlisle Companies' shares before the 17th of May in order to receive the dividend, which the company will pay on the 3rd of June.  

The company's next dividend payment will be US$0.85 per share, on the back of last year when the company paid a total of US$3.40 to shareholders.  Based on the last year's worth of payments, Carlisle Companies has a trailing yield of 0.8% on the current stock price of US$416.63.    We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose!  We need to see whether the dividend is covered by earnings and if it's growing.

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.   Carlisle Companies paid out just 20% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances.     That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow.     What's good is that dividends were well covered by free cash flow, with the company paying out 15% of its cash flow last year.    

It's positive to see that Carlisle Companies's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

NYSE:CSL Historic Dividend May 12th 2024

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising.   If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke.     That's why it's comforting to see Carlisle Companies's earnings have been skyrocketing, up 23% per annum for the past five years.        Carlisle Companies looks like a real growth company, with earnings per share growing at a cracking pace and the company reinvesting most of its profits in the business.    

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth.     In the past 10 years, Carlisle Companies has increased its dividend at approximately 14% a year on average.      It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.  

To Sum It Up

Is Carlisle Companies worth buying for its dividend?       We love that Carlisle Companies is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. These characteristics suggest the company is reinvesting in growing its business, while the conservative payout ratio also implies a reduced risk of the dividend being cut in the future.         It's a promising combination that should mark this company worthy of closer attention.  

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces.     To help with this, we've discovered 1 warning sign for Carlisle Companies that you should be aware of before investing in their shares.  

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.