Cracker Barrel Old Country Store (NASDAQ:CBRL) Has Affirmed Its Dividend Of $0.25
Cracker Barrel Old Country Store (NASDAQ:CBRL) has confirmed a dividend payment of $0.25 per share, scheduled for November 12. This represents a 2.3% yield based on the current stock price. Despite a history of dividend cuts, the company is expected to cover the dividend comfortably with earnings, projecting a payout ratio of 38% next year. However, the dividend has decreased significantly over the past decade, raising concerns about its growth potential. Overall, while the dividend is currently sustainable, the company may not be a strong choice for dividend investors due to its unstable history and limited growth prospects.
The board of Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) has announced that it will pay a dividend on the 12th of November, with investors receiving $0.25 per share. This means that the annual payment will be 2.3% of the current stock price, which is in line with the average for the industry.
We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.
Cracker Barrel Old Country Store's Payment Could Potentially Have Solid Earnings Coverage
Unless the payments are sustainable, the dividend yield doesn't mean too much. Based on the last payment, Cracker Barrel Old Country Store was quite comfortably earning enough to cover the dividend. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.
Over the next year, EPS is forecast to expand by 23.6%. If the dividend continues on this path, the payout ratio could be 38% by next year, which we think can be pretty sustainable going forward.
Check out our latest analysis for Cracker Barrel Old Country Store
Dividend Volatility
Although the company has a long dividend history, it has been cut at least once in the last 10 years. The dividend has gone from an annual total of $4.00 in 2015 to the most recent total annual payment of $1.00. The dividend has fallen 75% over that period. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.
The Dividend Has Limited Growth Potential
Given that dividend payments have been shrinking like a glacier in a warming world, we need to check if there are some bright spots on the horizon. Earnings per share has been sinking by 15% over the last five years. This steep decline can indicate that the business is going through a tough time, which could constrain its ability to pay a larger dividend each year in the future. On the bright side, earnings are predicted to gain some ground over the next year, but until this turns into a pattern we wouldn't be feeling too comfortable.
In Summary
Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. The payments haven't been particularly stable and we don't see huge growth potential, but with the dividend well covered by cash flows it could prove to be reliable over the short term. Overall, we don't think this company has the makings of a good income stock.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 3 warning signs for Cracker Barrel Old Country Store that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.
