Shares of Ruralco Holdings Limited (ASX:RHL) will begin trading ex-dividend in 3 days. To qualify for the dividend check of A$0.09 per share, investors must have owned the shares prior to 31 May 2018, which is the last day the company’s management will finalize their list of shareholders to which they will send dividend payments. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine Ruralco Holdings’s latest financial data to analyse its dividend characteristics. Check out our latest analysis for Ruralco Holdings
5 checks you should use to assess a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
- Is it paying an annual yield above 75% of dividend payers?
- Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
- Has the amount of dividend per share grown over the past?
- Can it afford to pay the current rate of dividends from its earnings?
- Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
Does Ruralco Holdings pass our checks?
The current trailing twelve-month payout ratio for the stock is 60.15%, which means that the dividend is covered by earnings. Going forward, analysts expect RHL’s payout to remain around the same level at 54.65% of its earnings, which leads to a dividend yield of around 5.03%. Moreover, EPS should increase to A$0.29. Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. Not only have dividend payouts from Ruralco Holdings fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. These characteristics do not bode well for income investors seeking reliable stream of dividends. Compared to its peers, Ruralco Holdings produces a yield of 4.75%, which is high for Retail Distributors stocks but still below the market’s top dividend payers.
Taking all the above into account, Ruralco Holdings is a complicated pick for dividend investors given that there are a couple of positive things about it as well as negative. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Below, I’ve compiled three pertinent factors you should look at:
- Future Outlook: What are well-informed industry analysts predicting for RHL’s future growth? Take a look at our free research report of analyst consensus for RHL’s outlook.
- Valuation: What is RHL worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether RHL is currently mispriced by the market.
- Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.