Yahoo Finance

A large part of investment returns can be generated by dividend-paying stock given their role in compounding returns over time. Over the past 6 years, Banaras Beads Limited (NSE:BANARBEADS) has returned an average of 4.00% per year to shareholders in terms of dividend yield. Let’s dig deeper into whether Banaras Beads should have a place in your portfolio. Check out our latest analysis for Banaras Beads

5 questions to ask before buying a dividend stock

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

• Is it paying an annual yield above 75% 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?

• Does earnings amply cover its dividend payments?

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

Does Banaras Beads pass our checks?

The company currently pays out 48.08% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward.

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. Unfortunately, it is really too early to view Banaras Beads as a dividend investment. It has only been consistently paying dividends for 6 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.

Compared to its peers, Banaras Beads generates a yield of 2.13%, which is high for Luxury stocks.

Next Steps:

If you are building an income portfolio, then Banaras Beads 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, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. There are three key aspects you should further research:

1. Future Outlook: What are well-informed industry analysts predicting for BANARBEADS’s future growth? Take a look at our free research report of analyst consensus for BANARBEADS’s outlook.

2. Valuation: What is BANARBEADS worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether BANARBEADS is currently mispriced by the market.

3. Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.