Important news for shareholders and potential investors in The Go-Ahead Group plc (LON:GOG): The dividend payment of UK£0.72 per share will be distributed to shareholders on 23 November 2018, and the stock will begin trading ex-dividend at an earlier date, 08 November 2018. Is this future income a persuasive enough catalyst for investors to think about Go-Ahead Group 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 Go-Ahead Group

Here’s how I find good dividend stocks

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

• Is their annual yield among the top 25% of dividend payers?

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

• Has the amount of dividend per share grown over the past?

• Is is able to pay the current rate of dividends from its earnings?

• Will it have the ability to keep paying its dividends going forward?

Does Go-Ahead Group pass our checks?

Go-Ahead Group has a trailing twelve-month payout ratio of 49%, which means that the dividend is covered by earnings. Going forward, analysts expect GOG’s payout to increase to 63% of its earnings, which leads to a dividend yield of around 6.5%. However, EPS is forecasted to fall to £1.59 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.

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 is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Although GOG’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, Go-Ahead Group produces a yield of 6.5%, which is high for Transportation stocks.

Next Steps:

With this in mind, I definitely rank Go-Ahead Group 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 urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. I’ve put together three pertinent aspects you should further examine: