In This Article:
On the 15 June 2018, AMA Group Limited (ASX:AMA) will be paying shareholders an upcoming dividend amount of A$0.01 per share. However, investors must have bought the company’s stock before 27 April 2018 in order to qualify for the payment. That means you have only 3 days left! Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into AMA Group’s latest financial data to analyse its dividend attributes. See our latest analysis for AMA Group
5 checks you should use to assess a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
-
Is their annual yield among the top 25% of dividend payers?
-
Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
-
Has dividend per share risen in the past couple of years?
-
Is its earnings sufficient to payout dividend at the current rate?
-
Will it have the ability to keep paying its dividends going forward?
How does AMA Group fare?
AMA Group has a trailing twelve-month payout ratio of 81.08%, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect AMA’s payout to fall to 60.37% of its earnings, which leads to a dividend yield of 3.50%. However, EPS should increase to A$0.04, 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. Not only have dividend payouts from AMA Group fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. This means that dividend hunters should probably steer clear of the stock, at least for now until the track record improves. Relative to peers, AMA Group generates a yield of 2.49%, which is on the low-side for Specialty Retail stocks.
Next Steps:
If you are building an income portfolio, then AMA Group 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, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. There are three essential aspects you should further research: