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Highlights
- Shoe Carnival's upcoming ex-dividend date is October 7.
- The company's dividend is comfortably covered by both profit and free cash flow, indicating sustainability and low risk of a dividend cut.
- Over the last five years, Shoe Carnival has increased earnings per share, supporting both future growth and dividend potential.
Shoe Carnival, Inc., a prominent player in the footwear retail sector, is preparing to go ex-dividend within the next two days. The ex-dividend date is set for October 7, and shareholders must own the stock by this date to be eligible for the upcoming dividend payment. Shoe Carnival is set to pay its dividend on October 21, rewarding investors who hold shares before the ex-dividend date.
The company has announced a dividend of $0.135 per share, continuing its consistent payout pattern. Over the past 12 months, Shoe Carnival has distributed $0.54 per share, which gives the stock a trailing dividend yield of around 1.3% based on the current price of $40.50. This yield, while modest, is backed by a solid earnings record, making it a reliable source of income for shareholders.
Dividend Sustainability and Coverage
Dividends are a key metric for investors looking for steady income, but they must be sustainable. Shoe Carnival Inc. (NASDAQ: SCVL)’s dividend payout ratio stands at just 18% of its after-tax profit, which is considered conservative and leaves room for flexibility in case of future challenges. Moreover, the company’s payout ratio relative to free cash flow is even lower, at 14%. This demonstrates that the dividend is well-covered by both profit and cash flow, providing confidence in its sustainability.
A low payout ratio also suggests that the company has the capacity to reinvest profits back into its business, which is crucial for long-term growth. As long as earnings remain stable or improve, Shoe Carnival’s dividend should remain secure.
Earnings and Dividend Growth
Sustainable earnings growth is often a sign of a strong dividend stock, as it allows companies to increase payouts over time. Shoe Carnival has been performing well in this regard, growing its earnings per share by 18% annually over the past five years. This robust growth is a testament to the company’s solid financial management and ability to reinvest profits for future expansion.
Additionally, Shoe Carnival’s dividend has grown at an impressive average rate of 16% per year over the past decade. With rising earnings and a disciplined payout strategy, the company is well-positioned to continue offering attractive dividends to its shareholders.
