A Cringeworthy 362% Payout Ratio ☠️

Recreational vehicles certainly had their moment during the pandemic. But can Camping World maintain its dividend now that sales have slowed? ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ 

AN OXFORD CLUB PUBLICATION

View in browser SPONSORED The #1 Energy Passive Income Investment for 2023 It's not a stock, bond or private company... But this little-known alternative investment could hand you BIG MONTHLY INCOME from the oil and gas surge in 2023. CLICK HERE TO FIND OUT WHAT IT IS SAFETY NET Can This 11.6% Yielder Keep Rolling Down the Road? Marc Lichtenfeld, Chief Income Strategist, The Oxford Club It's no secret that the pandemic was good for recreational vehicle (RV) sales. When no one was flying and everyone was tired of looking at the same walls in their homes, lots of folks took the plunge and bought an RV. Sales for manufacturers and retailers boomed. But in 2022, as things returned to normal, RV sales couldn't keep up their frenetic pace. That makes analyzing the dividend safety of Camping World Holdings (NYSE: CWH) an interesting exercise. Free cash flow exploded in 2020 but dropped dramatically in 2021 and 2022, as the pandemic likely cannibalized sales for several years into the future. However, this year, free cash flow is forecast to spike back to over $400 million. I'm a little skeptical that free cash flow will rocket as high as Wall Street thinks it will, as earnings and revenue are both projected to be lower in 2023. So we have two years of declining free cash flow, which the Safety Net model most definitely does not like. Furthermore, because free cash flow was a minuscule $29 million last year, the $105 million in dividends paid to shareholders gives us a sky-high 362% payout ratio. In other words, for every $1 in free cash flow that Camping World took in, it paid shareholders $3.62. That's not sustainable, and the stock's dividend safety rating gets penalized as a result. SPONSORED Claim Your 83%-Plus Win Rate GUARANTEE A former CBOE trader delivers one trade idea every week. He calls them "Wednesday Winners" - due to his impressive win rate on this simple strategy. And even in these volatile markets... his goal is to beat his current 83% win rate! Watch this immediately. However, if free cash flow comes in at even half of the predicted level for this year, it will be more than enough to afford the dividend. Camping World pays a $0.625 per share quarterly dividend, which comes out to a robust 11.6% yield. Additionally, the company often pays special dividends. It did not in 2022 - as last year was a tougher period - but special dividends were somewhat common prior to that. Still, Safety Net does not take special dividends into account. When looking at quarterly dividends only, we see that the company has never cut the dividend since it began paying one in 2016. The falling cash flow and too-high payout ratio mean the dividend safety rating is low. But if free cash flow does significantly improve the way Wall Street expects, the stock could get an upgrade next year. If cash flow doesn't rebound, the current dividend will be in jeopardy. Dividend Safety Rating: D If you have a stock whose dividend safety you'd like me to analyze, leave the ticker in the comments section. Be sure to check out the Wealthy Retirement website to see whether I've written about the dividend safety of your favorite stock recently. Just click on the word search at the upper right part of the page and type in the name of the company. Good investing, Marc Leave a Comment RECOMMENDED LINKS If You're 50 or Over, You Will Not See THIS OPPORTUNITY Again in Your Lifetime Beware: Global Recession Is "Inevitable" in 2023. If You Can't Weather Another Recession, Check Out This Presentation. MORE FROM WEALTHY RETIREMENT The First Thing They Teach You on the CBOE Microcap Stocks: Why You Should Diversify Your Portfolio Carlyle Group: Are Low P/E Ratio Stocks a Good Value? 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