Today is Wednesday, April 17, 2019, and this is your daily dividend safety update. Today we’re looking at Chesapeake Utilities (NYSE: CPK) stock to see whether its 1.62% dividend is safe.
Let’s look at the company’s payout ratio, cash flow growth, and dividend history to gauge the probability of a dividend cut in the next few years.
Payout Ratio (Dividends/Earnings)
Chesapeake Utilities has a payout ratio of 38.96%. That’s low enough for us! Payout ratio equals dividends per share divided by earnings per share. A low payout ratio indicates that the company has plenty of money to cover its dividend. We’d be more concerned if the ratio was closer to 100% (or over it).
Cash Flow Growth Year-Over-Year
Chesapeake Utilities has not grown its cash flow in the last year. That’s a bad omen for dividend investors. No cash flow means no dividend, so if cash flow isn’t growing, that’s a problem for us.
Dividend History & Recent Cuts
Chesapeake Utilities has not cut its dividend in the recent past. That’s a good sign. It’s not a guarantee that the company will never cut its dividend, but companies that have cut their dividends recently are generally more likely to cut them again.
Chesapeake Utilities stock has failed 1 of our 3 dividend safety metrics. With that in mind, we believe a dividend cut is possible in the next few years.
We’ve been keeping an eye on some dividend stocks that could be better for your income portfolio than Chesapeake Utilities. These dividends are much bigger — and safer — than the paltry yields many investors settle for. Enter your email below to learn more.
P.S. Are you worried about the safety of your dividend stocks? Is there a particular stock you want us to grade next? Leave the ticker symbol in the comment section below.