There are usually not many Dividend shares which have raised their per-share payout yearly for many years. However there are some.

One such Dividend Aristocrat is FTSE 250 meals producer Cranswick (LSE: CWK). It makes sandwiches and different meals for commerce prospects similar to supermarkets.

The storied dividend share isn’t low-cost. However I’m tempted to purchase it nonetheless.

Confirmed enterprise mannequin

Meals manufacturing could not sound like essentially the most thrilling of companies. However one benefit it has is resilient demand. It doesn’t matter what occurs to the economic system, individuals have to eat.

Cranswick has accomplished a superb job in rising its income over the long run.

Supply: TradingView

However income is one factor. What about earnings? In spite of everything, meals manufacturing is usually a low-margin enterprise. By processing meals, Cranswick provides worth within the provide chain, serving to margins.

Final 12 months, post-tax revenue was £111m on £2.3bn revenues. That could be a web revenue margin of 4.8%. Possibly not spectacular, however within the extremely aggressive meals business I believe it’s first rate.

This chart reveals how earnings per share have grown over time too. I see that as a optimistic attribute of the Cranswick enterprise.

Supply: TradingView

That enhancing profitability has helped to assist the dividend share’s very good monitor file of shareholder payouts.

Supply: TradingView

The place issues go from right here

Nonetheless, dividends are by no means assured. Cranswick’s is roofed greater than twice by earnings. I see that as a cushty degree of protection.

Supply: TradingView

However whether or not the dividend is maintained, not to mention retains rising commonly, will finally depend upon efficiency.

The enterprise stated in January that its adjusted pre-tax revenue for the 12 months must beat earlier expectations.

However like several firm, it does face dangers. Meals price and wage inflation can eat into the underside line. The prices of increasing and automating manufacturing amenities similar to a brand new hummus manufacturing unit in Larger Manchester might additionally affect earnings.

However I just like the Confirmed Enterprise Mannequin and have excessive hopes for the corporate’s future success.

Ought to I purchase?

This month has seen a director and his spouse promote shares, for ‘personal financial planning’.

Presently buying and selling on a price-to-earnings (P/E) ratio of 18, I don’t assume the shares look low-cost. However is it costly? I believe that is determined by how Cranswick delivers in coming years.

I’ve been tempted to purchase repeatedly lately and didn’t. The share has moved up 52% in 5 years. Certainly, it’s up 39% simply prior to now 12 months. If enterprise efficiency retains enhancing, I believe there may very well be room for additional worth progress.

I would love a wider margin of security although. A P/E ratio of 18 doesn’t give me that, I really feel.

So for now, tempted although I’m to purchase this dividend share for my portfolio, I’ll as an alternative simply maintain it on my watchlist.