On the 05 January 2018, Renewi plc (LSE:RWI) will be paying shareholders an upcoming dividend amount of £0.01 per share. However, investors must have bought the company’s stock before 30 November 2017 in order to qualify for the payment. That means you have only 3 days left! What does this mean for current shareholders and potential investors? Below, I will explain how holding RWI can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes. View our latest analysis for Renewi

5 checks you should use to assess a dividend stock

When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:

• 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 it increased its dividend per share amount over the past?

• Is is able to pay the current rate of dividends from its earnings?

• Will the company be able to keep paying dividend based on the future earnings growth?

How well does Renewi fit our criteria?

The current payout ratio for RWI is negative, meaning that the company is not yet profitable and is paying dividend by dipping into its retained earnings. 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. Not only have dividend payouts from Renewi 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. In terms of its peers, RWI generates a yield of 2.96%, which is high for commercial services and supplies stocks but still below the market’s top dividend payers.

What this means for you:

Are you a shareholder? You may be wondering why Renewi is paying out dividends at all, instead of re-investing into the business to generate higher cash flows in the future. It may be worth exploring other income stocks as alternatives to RWI or even look at high-growth stocks to complement your steady income stocks. I recommend continuing your research by checking out my interactive free list of dividend rockstars as well as high-growth stocks to potentially add to your holdings.

Are you a potential investor? Now you know to keep in mind the reason why investors should be careful investing in RWI for the dividend. On the other hand, if you are not strictly just a dividend investor, RWI could still be offering some interesting investment opportunities. As always, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Dig deeper in our latest free fundmental analysis to explore other aspects of RWI.

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.