Cable One, Inc. (NYSE:CABO) has announced that it will pay a dividend of $2.95 per share on the 20th of December. This payment means that the dividend yield will be 2.8%, which is around the industry average.

Check out our latest analysis for Cable One

Cable One's Future Dividend Projections Appear Well Covered By Earnings

We aren't too impressed by dividend yields unless they can be sustained over time. However, prior to this announcement, Cable One's dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.

Over the next year, EPS is forecast to fall by 33.9%. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 50%, which is comfortable for the company to continue in the future.

Cable One Doesn't Have A Long Payment History

Cable One's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. Since 2015, the annual payment back then was $6.00, compared to the most recent full-year payment of $11.80. This implies that the company grew its distributions at a yearly rate of about 7.8% over that duration. Cable One has a nice track record of dividend growth but we would wait until we see a longer track record before getting too confident.

We Could See Cable One's Dividend Growing

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Cable One has impressed us by growing EPS at 6.2% per year over the past five years. Cable One definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

In Summary

Overall, a consistent dividend is a good thing, and we think that Cable One has the ability to continue this into the future. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Taking the debate a bit further, we've identified 2 warning signs for Cable One that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.