Attention dividend hunters! Gunnebo AB (STO:GUNN) will be distributing its dividend of kr0.60 per share on the 19 October 2018, and will start trading ex-dividend in 4 days time on the 15 October 2018. Is this future income a persuasive enough catalyst for investors to think about Gunnebo as an investment today? Below, I’m going to look at the latest data and analyze the stock and its dividend property in further detail.
Check out our latest analysis for Gunnebo
5 questions I ask before picking 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 it consistently paid a stable dividend without missing a payment or drastically cutting payout?
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Has dividend per share amount increased over the past?
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Is its earnings sufficient to payout dividend at the current rate?
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Will it be able to continue to payout at the current rate in the future?
How well does Gunnebo fit our criteria?
Gunnebo has a trailing twelve-month payout ratio of 68%, which means that the dividend is covered by earnings. In the near future, analysts are predicting lower payout ratio of 42%, leading to a dividend yield of 5.1%. In addition to this, EPS is also forecasted to fall to SEK-2.62 in the upcoming year. The lower EPS on top of a lower payout ratio will lead to a fall in dividend payment moving forward.
When considering the sustainability of dividends, it is also worth checking the cash flow of a company. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Not only have dividend payouts from Gunnebo 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.
Relative to peers, Gunnebo produces a yield of 4.7%, which is high for Commercial Services stocks.
Next Steps:
With this in mind, I definitely rank Gunnebo as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. 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. Below, I’ve compiled three key factors you should further research: