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Is it time to buy CA Inc for the Dividends? (NASDAQ:CA)
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We assess CA Inc (NASDAQ:CA), a dividend paying company in the Business Software & Services industry to determine if it is a healthy dividend paying stock that investors should consider as a solid income generating addition to their portfolios or not. CA Inc is currently priced at $31.39 after moving down -0.65% in the previous day of trading. [Trend Analysis]
CA is currently paying an annualized dividend of $1.00 per share, translating to a dividend yield of approximately 3.20%. Generally we would consider a stock paying a dividend greater than 80% of its earnings to be risky. This is due to the possibility that they will be unable to afford to pay the dividend in the future due to having no reserves and also not having cash reserves available for emergencies. CA Inc (NASDAQ:CA) currently has a dividend pay out ratio of 55.20%, therefore we consider CA’s dividend to be moderately risky, in this respect.
The next assessment we perform is by determining the quick ratio of CA. The quick ratio tells us if a company will be able to cover all of its current liabilities with liquid assets on hand. As a rule of thumb a number of 1.0 or better indicates this is likely, meaning the stock’s dividend is less risky. CA Inc currently has a quick ratio of 1.30, meaning it is in a relatively safe position.
Finally we look at the estimated earnings growth for CA Inc (NASDAQ:CA) over the coming 5 years. Generally if earnings are predicted to continue to grow, one can expect there to be continued earnings from which to pay dividends.
CA Inc has an estimated annual growth over the next 5 years of -5.05%. This means that it would appear CA may have trouble maintaining their current dividend.
CA Inc (NASDAQ:CA) will make their next dividend payment on 3/17/2015 and went ex-dividend on 2/17/2015.