In the not-so-distant past, cruise ship operator Carnival Corporation (CCL -0.27%) (CUK -0.37%) was a predictable, high-yield dividend stock. The company's most recent dividend payout streak started in August 2013 and lasted until early 2020. 

Let's say you bought Carnival stock at the start of that streak for $36.50 per share -- that's about where it was trading back then. Over the next 6.5 years, you would have received over $9 in dividends for each share you originally bought. That's nearly 25% of what you paid for the shares -- a stellar dividend investment.

However, once the COVID-19 pandemic sent cruise ships to the docks, Carnival had to suspend its quarterly dividend payments. Its dividend history has investors wondering if it can be a great dividend investment again someday. But there are reasons why you shouldn't expect this to happen any time soon.

A cruise ship is pictured off of the coast of Alaska.

Image source: Getty Images.

What made it great

Before the coronavirus, the untapped cruise market was surprisingly enormous. For example, according to a 2016 survey by Allianz Global Assistance, 66% of people in the United States had never taken a cruise before. However, it seems most people enjoy cruises once they finally try one. Some estimates say that, historically, cruise ships are 50% filled by repeat cruisers. Moreover, Carnival was the market-share leader with an estimated 45% of the market.

Therefore, cruise lines had a steady stream of repeat customers and a large untapped market for new customers. This afforded management with a luxury: It could regularly order new cruise ships with reasonable certainty they could be filled. For example, toward the end of 2019, Carnival was scheduled to receive 17 cruise ships by 2025. Some would replace old ones; others would increase its overall capacity.

From there it was pretty straightforward. By running a tight ship (ahem), Carnival management was able to achieve respectable net profit margins of 14.9%, 16.7%, and 14.4% in 2017, 2018, and 2019, respectively. And with a manageable long-term debt situation, management could reward shareholders with the profits. Some of this came in the form of its high-yield dividend. The company's payout ratio was 46% in 2019 -- a high percentage demonstrating management's prioritization of the dividend. But it also rewarded shareholders by regularly buying back its own stock.

A chalkboard has the word dividends at the center, surrounded by abstract financial images.

Image source: Getty Images.

Where it goes from here

During the best of times, Carnival proved it could be a profitable company and a great dividend stock. But these are not the best of times. The company hasn't been able to sail because of the pandemic. Consequently, it registered a massive net loss of over $10 billion in 2020, and its total debt increased by over $15 billion.

There's no sugar-coating it -- Carnival has a long road ahead to completely recover financially. First things first, it has to get back to sailing, and that's still on hold at least until the end of June. And as long as ships are in port, Carnival continues to burn cash at a rate of $500 million to $600 million per month. In other words, the bleeding hasn't stopped yet.

Once it's sailing again, Carnival's next hurdle will be filling its cruise ships. According to a recent survey by Cruise Lines International Association (CLIA), 74% of people who have cruised before are looking forward to cruising again. However, other surveys suggest people are still waiting for the coronavirus to be more under control. And there's no way to know how safe will be safe enough or if new strains of the virus will cause future setbacks. In short, it will take time before Carnival's ships are full again.

Therefore, it looks like Carnival is at least a few years away from generating the revenue it was in 2019. And once it returns to profitability, its immediate concern will be whittling away at its debt load, not a dividend. This could also take some time.

The waters are still rough

Personally, I wouldn't buy Carnival stock today in hopes of its future dividend. As we've seen, it'll be a while. Moreover, even assuming it's smooth sailing and Carnival is able to make a full financial recovery, it won't likely be the dividend stock it was before.

It's easy to overlook, but Carnival only had roughly 630 million shares in 2019. But with the stock offerings and convertible notes it issued to survive this season, its share count has risen to almost 1.2 billion now. Therefore, even if Carnival's earnings fully return along with its old payout ratio, the dividend will be almost half of what it once was.

Give Carnival credit for continuing to survive a once-in-a-lifetime headwind. But don't hold out hope for it to return to being a great dividend stock any time soon.