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Important news for shareholders and potential investors in GWA Group Limited (ASX:GWA): The dividend payment of AU$0.095 per share will be distributed into shareholder on 06 September 2018, and the stock will begin trading ex-dividend at an earlier date, 27 August 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine GWA Group’s latest financial data to analyse its dividend characteristics.
View our latest analysis for GWA Group
5 questions I ask before picking a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
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Is it paying an annual yield above 75% of dividend payers?
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Does it consistently pay out dividends without missing a payment of significantly cutting payout?
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Has it increased its dividend per share amount over the past?
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Does earnings amply cover its dividend payments?
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Will it have the ability to keep paying its dividends going forward?
Does GWA Group pass our checks?
The company currently pays out 94.76% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is not sufficiently covered by its earnings. However, going forward, analysts expect GWA’s payout to fall into a more sustainable range of 86.90% of its earnings, which leads to a dividend yield of around 4.89%. Moreover, EPS should increase to A$0.19, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
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. Dividend payments from GWA Group have been volatile in the past 10 years, with some years experiencing significant drops of over 25%. These characteristics do not bode well for income investors seeking reliable stream of dividends.
Compared to its peers, GWA Group generates a yield of 5.14%, which is high for Building stocks but still below the market’s top dividend payers.
Next Steps:
Now you know to keep in mind the reason why investors should be careful investing in GWA Group for the dividend. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. I’ve put together three fundamental aspects you should look at: