If you are interested in cashing in on Ritchie Bros Auctioneers Incorporated’s (NYSE:RBA) upcoming dividend of $0.17 per share, you only have 3 days left to buy the shares before its ex-dividend date, 28 November 2017, in time for dividends payable on the 20 December 2017. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine RBA’s latest financial data to analyse its dividend characteristics. Check out our latest analysis for Ritchie Bros. Auctioneers
5 questions to ask before buying a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
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Is its annual yield among the top 25% of dividend-paying companies?
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Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
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Has the amount of dividend per share grown over the past?
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Is is able to pay the current rate of dividends from its earnings?
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Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
Does Ritchie Bros. Auctioneers pass our checks?
The current payout ratio for RBA is 109.96%, meaning the dividend is not sufficiently covered by its earnings. However, going forward, analysts expect RBA’s payout to fall into a more sustainable range of 63.71% of its earnings, which leads to a dividend yield of 2.70%. In addition to this, EPS should increase to $0.9, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. In the case of RBA it has increased its DPS from $0.32 to $0.68 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock. In terms of its peers, RBA generates a yield of 2.66%, 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?
Are you a shareholder? With Ritchie Bros. Auctioneers producing strong dividend income for your portfolio over the past few years, you can take comfort in knowing that this stock will still continue to be a robust dividend generator moving forward. However, depending on your portfolio composition, it may be valuable exploring other dividend stocks to increase diversification, or even look at high-growth stocks to supplement your steady income stocks. I suggest continuing your research by taking a look at my interactive free list of dividend rockstars as well as high-growth stocks to potentially add to your holdings.