Attention dividend hunters! Euromoney Institutional Investor PLC (LSE:ERM) will be distributing its dividend of £0.22 per share in 3 days time, on the 15 February 2018, and will start trading ex-dividend on the 30 November 2017. What does this mean for current shareholders and potential investors? Below, I will explain how holding ERM can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes. Check out our latest analysis for Euromoney Institutional Investor

5 questions I ask before picking a dividend stock

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

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

• Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?

• Has dividend per share risen in the past couple of years?

• Does earnings amply cover its dividend payments?

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

How does Euromoney Institutional Investor fare?

The company currently pays out 93.47% of its earnings as a dividend, meaning the dividend is not sufficiently covered by its earnings. However, going forward, analysts expect ERM’s payout to fall into a more sustainable range of 40.72% of its earnings, which leads to a dividend yield of around 2.83%. In addition to this, EPS should increase to £0.6, 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. Although ERM’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Shareholders would have seen a few years of reduced payments in this time. In terms of its peers, ERM has a yield of 2.65%, which is on the low-side for media stocks.

What this means for you:

Are you a shareholder? Whilst there are few things you may like about Euromoney Institutional Investor from a dividend stock perspective, the truth is that overall it probably is not the best choice for a dividend investor. It may be beneficial exploring other dividend stocks as alternatives to ERM or even look at high-growth stocks to complement your steady income stocks. I encourage you to continue your research by checking out my interactive free list of dividend rockstars as well as high-growth stocks to potentially add to your holdings.