Columbia Sportswear (NASDAQ:COLM) shareholders will receive a larger dividend than last year

The advice of Columbia sportswear company (NASDAQ:COLM) announced that it would increase its dividend on March 21 to $0.30. The announced payout will bring the dividend yield to 1.1%, which is in line with the industry average.

Check out our latest analysis for Columbia Sportswear

Columbia Sportswear Revenue Easily Covers Distributions

We like to see a healthy dividend yield, but that only helps us if the payout can continue. However, prior to this announcement, Columbia Sportswear‘s dividend was comfortably covered by both cash flow and earnings. As a result, much of what he earned was plowed back into the business.

Over the next year, EPS is expected to increase by 6.4%. If the dividend continues on this path, the payout ratio could be 19% by next year, which we believe can be quite sustainable going forward.

NasdaqGS:COLM Historic Dividend February 8, 2022

Dividend volatility

The company has a long history of dividends, but it doesn’t look good with the cuts of the past. Since 2012, the first annual payment was $0.44, compared to $1.20 for the last annual payment. This equates to a compound annual growth rate (CAGR) of approximately 11% per year during this period. Dividends have grown rapidly over this period, but with cuts in the past, we’re not sure this stock will be a reliable source of income in the future.

The dividend should increase

Since the dividend has been reduced in the past, we need to check if earnings are increasing and if this could lead to higher dividends in the future. We are encouraged to see that Columbia Sportswear has increased its earnings per share by 15% per year over the past five years. With decent growth and a low payout ratio, we think this bodes well for Columbia Sportswear’s prospects of increasing its dividend payouts going forward.

We really like the Columbia Sportswear dividend

In summary, it is always positive to see the dividend increase, and we are particularly satisfied with its overall sustainability. Profits easily cover distributions and the company generates plenty of cash. Overall, this checks a lot of the boxes we look for when choosing an income stock.

It is important to note that companies with a consistent dividend policy will generate greater investor confidence than those with an erratic policy. At the same time, there are other factors that our readers should be aware of before investing capital in a stock. For example, we chose 1 warning sign for Columbia Sportswear that investors should consider. Looking for more high yield dividend ideas? Try our curated list of strong dividend payers.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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