What To Know Before Buying Sinclair Broadcast Group Inc (NASDAQ:SBGI) For Its Dividend

Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. Over the past 10 years, Sinclair Broadcast Group Inc (NASDAQ:SBGI) has returned an average of 3.00% per year to shareholders in terms of dividend yield. Does Sinclair Broadcast Group tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. Check out our latest analysis for Sinclair Broadcast Group

5 questions to ask before buying a dividend stock

If you are a dividend investor, you should always assess these five key metrics:

• Is it paying an annual yield above 75% of dividend payers?

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

• Has the amount of dividend per share grown over the past?

• Is is able 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?

NasdaqGS:SBGI Historical Dividend Yield June 24th 18

How well does Sinclair Broadcast Group fit our criteria?

The company currently pays out 13.09% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a higher payout ratio of 24.15%, leading to a dividend yield of around 2.34%. However, EPS is forecasted to fall to $2.65 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.

If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Not only have dividend payouts from Sinclair Broadcast Group fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. This means that dividend hunters should probably steer clear of the stock, at least for now until the track record improves.

Relative to peers, Sinclair Broadcast Group has a yield of 2.19%, which is high for Media stocks but still below the market’s top dividend payers.

Next Steps:

Taking all the above into account, Sinclair Broadcast Group 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 recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. Below, I’ve compiled three important factors you should further research:

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

2. Valuation: What is SBGI 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 SBGI 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.