How Does Quartix Holdings plc (LON:QTX) Fare As A Dividend Stock?

Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. Quartix Holdings plc (LON:QTX) has returned to shareholders over the past 3 years, an average dividend yield of 2.00% annually. Let’s dig deeper into whether Quartix Holdings should have a place in your portfolio. View out our latest analysis for Quartix Holdings

5 questions I ask before picking a dividend stock

Whenever I am looking at a potential dividend stock investment, I always check these five metrics:

• Is its annual yield among the top 25% of dividend-paying companies?

• Does it consistently pay out dividends without missing a payment of significantly cutting payout?

• Has dividend per share amount increased over the past?

• Is its earnings sufficient to payout dividend at the current rate?

• Will it have the ability to keep paying its dividends going forward?

AIM:QTX Historical Dividend Yield June 25th 18

How well does Quartix Holdings fit our criteria?

The current trailing twelve-month payout ratio for the stock is 54.62%, which means that the dividend is covered by earnings. Going forward, analysts expect QTX’s payout to increase to 93.79% of its earnings, which leads to a dividend yield of around 2.99%. In addition to this, EPS should increase to £0.12. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward. However this does bring about uncertainty around the sustainability of the payout ratio.

If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. The reality is that it is too early to consider Quartix Holdings as a dividend investment. It has only been consistently paying dividends for 3 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.

Relative to peers, Quartix Holdings has a yield of 3.55%, which is high for Software stocks but still below the market’s top dividend payers.

Next Steps:

After digging a little deeper into Quartix Holdings’s yield, it’s easy to see why you should be cautious investing in the company just for the dividend. On the other hand, if you are not strictly just a dividend investor, the stock could still be offering some interesting investment opportunities. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. There are three essential factors you should further examine:

1. Future Outlook: What are well-informed industry analysts predicting for QTX’s future growth? Take a look at our free research report of analyst consensus for QTX’s outlook.

2. Valuation: What is QTX 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 QTX is currently mispriced by the market.

3. 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.