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Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. ASR Nederland NV (AMS:ASRNL) has recently paid dividends to shareholders, and currently yields 3.2%. Let’s dig deeper into whether ASR Nederland should have a place in your portfolio.
View our latest analysis for ASR Nederland
How I analyze 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 the amount of dividend per share grown over the past?
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Is its earnings sufficient to payout dividend at the current rate?
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Will it have the ability to keep paying its dividends going forward?
Does ASR Nederland pass our checks?
The current trailing twelve-month payout ratio for the stock is 39%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a higher payout ratio of 47%, leading to a dividend yield of 4.7%. However, EPS is forecasted to fall to €4.66 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.
If you want to dive deeper into the sustainability of a certain payout ratio, you may wish to consider the cash flow of the business. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.
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. The reality is that it is too early to consider ASR Nederland as a dividend investment. It has only been consistently paying dividends for 2 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
In terms of its peers, ASR Nederland has a yield of 3.2%, which is on the low-side for Insurance stocks.
Next Steps:
If ASR Nederland is in your portfolio for cash-generating reasons, there may be better alternatives out there. 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. I’ve put together three relevant factors you should further research: