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If you are interested in cashing in on Abano Healthcare Group Limited’s (NZSE:ABA) upcoming dividend of NZ$0.18 per share, you only have 2 days left to buy the shares before its ex-dividend date, 08 February 2019, in time for dividends payable on the 22 February 2019. What does this mean for current shareholders and potential investors? Below, I will explain how holding Abano Healthcare Group can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes.
View our latest analysis for Abano Healthcare Group
How I analyze a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
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Is their annual yield among the top 25% 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 dividend per share risen in the past couple of years?
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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 does Abano Healthcare Group fare?
Abano Healthcare Group has a trailing twelve-month payout ratio of 89%, which means that the dividend is covered by earnings. However, going forward, analysts expect ABA’s payout to fall to 69% of its earnings. Assuming a constant share price, this equates to a dividend yield of 6.0%. However, EPS should increase to NZ$0.50, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
When considering the sustainability of dividends, it is also worth checking the cash flow of a company. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
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. ABA has increased its DPS from NZ$0.18 to NZ$0.36 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.
Relative to peers, Abano Healthcare Group generates a yield of 5.5%, which is high for Healthcare stocks but still below the market’s top dividend payers.
Next Steps:
With these dividend metrics in mind, I definitely rank Abano Healthcare Group as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. 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 essential aspects you should further examine: