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Important news for shareholders and potential investors in Atea ASA (OB:ATEA): The dividend payment of øre3.25 per share will be distributed to shareholders on 06 November 2018, and the stock will begin trading ex-dividend at an earlier date, 19 October 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into Atea’s latest financial data to analyse its dividend attributes.
Check out our latest analysis for Atea
5 checks you should do on a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
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Does it pay an annual yield higher than 75% of dividend payers?
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Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
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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 Atea fit our criteria?
Atea has a trailing twelve-month payout ratio of 125%, meaning the dividend is not sufficiently covered by its earnings. In the near future, analysts are predicting a lower payout ratio of 91%, leading to a dividend yield of around 6.1%. However, EPS should increase to NOK6.24, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.
If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. ATEA has increased its DPS from NOK1 to NOK6.5 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. This is an impressive feat, which makes ATEA a true dividend rockstar.
Compared to its peers, Atea produces a yield of 5.6%, which is high for IT stocks.
Next Steps:
Considering the dividend attributes we analyzed above, Atea is definitely worth keeping an eye on for someone looking to build a dedicated income portfolio. 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. Below, I’ve compiled three important aspects you should further examine: