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Important news for shareholders and potential investors in Elecnor SA (BME:ENO): The dividend payment of €0.045 per share will be distributed to shareholders on 12 December 2018, and the stock will begin trading ex-dividend at an earlier date, 10 December 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine Elecnor’s latest financial data to analyse its dividend characteristics.
View our latest analysis for Elecnor
5 checks you should do on a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
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Does it pay an annual yield higher than 75% of dividend payers?
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Has it paid dividend every year without dramatically reducing payout in the past?
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Has it increased its dividend per share amount 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 Elecnor pass our checks?
The company currently pays out 27% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward.
When considering the sustainability of dividends, it is also worth checking the cash flow of a company. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.
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. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Investors have seen reductions in the dividend per share in the past, although, it has picked up again.
Relative to peers, Elecnor generates a yield of 2.5%, which is on the low-side for Construction stocks.
Next Steps:
If you are building an income portfolio, then Elecnor is a complicated choice since it has some positive aspects as well as negative ones. 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. I’ve put together three important factors you should further research: