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Investors who want to cash in on Commercial Metals Company’s (NYSE:CMC) upcoming dividend of $0.12 per share have only 3 days left to buy the shares before its ex-dividend date, 03 April 2018, in time for dividends payable on the 19 April 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 Commercial Metals’s most recent financial data to examine its dividend characteristics in more detail. See our latest analysis for Commercial Metals

5 checks you should use to assess a dividend stock

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

• Is it paying an annual yield above 75% of dividend payers?

• Has it paid dividend every year without dramatically reducing payout in the past?

• Has dividend per share risen in the past couple of years?

• Can it afford to pay the current rate of dividends from its earnings?

• Will it be able to continue to payout at the current rate in the future?

How does Commercial Metals fare?

Commercial Metals has a trailing twelve-month payout ratio of 122.53%, which means that the dividend is not well-covered by its earnings. However, going forward, analysts expect CMC’s payout to fall into a more sustainable range of 21.12% of its earnings, which leads to a dividend yield of around 2.34%. In addition to this, EPS should increase to $1.79, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. The reality facing CMC investors is that whilst it has continued to pay shareholders dividend, there has not been any increase in the level of dividends paid in the past decade. However, income investors that value stability over growth may still find CMC appealing. Relative to peers, Commercial Metals produces a yield of 2.35%, which is on the low-side for Metals and Mining stocks.

Next Steps:

If you are building an income portfolio, then Commercial Metals is a complicated choice since it has some positive aspects as well as negative ones. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Below, I’ve compiled three relevant aspects you should look at: