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Whitecap Resources Inc. (TSE:WCP) stock is about to trade ex-dividend in 3 days. Typically, the ex-dividend date is two business days before the record date, which is the date on which a company determines the shareholders eligible to receive a 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 Whitecap Resources' shares before the 30th of May in order to receive the dividend, which the company will pay on the 16th of June.
The company's upcoming dividend is CA$0.0608 a share, following on from the last 12 months, when the company distributed a total of CA$0.73 per share to shareholders. Based on the last year's worth of payments, Whitecap Resources has a trailing yield of 8.4% on the current stock price of CA$8.73. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether Whitecap Resources has been able to grow its dividends, or if the dividend might be cut.
We've discovered 3 warning signs about Whitecap Resources. View them for free.
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. Fortunately Whitecap Resources's payout ratio is modest, at just 47% of profit. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. It paid out more than half (67%) of its free cash flow in the past year, which is within an average range for most companies.
It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
View our latest analysis for Whitecap Resources
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. It's encouraging to see Whitecap Resources has grown its earnings rapidly, up 43% a year for the past five years.