Important news for shareholders and potential investors in Beacon Lighting Group Limited (ASX:BLX): The dividend payment of AU$0.025 per share will be distributed into shareholder on 28 September 2018, and the stock will begin trading ex-dividend at an earlier date, 06 September 2018. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at Beacon Lighting Group’s most recent financial data to examine its dividend characteristics in more detail.

Check out our latest analysis for Beacon Lighting Group

5 checks you should use to assess a dividend stock

If you are a dividend investor, you should always assess these five key metrics:

• Does it pay an annual yield higher than 75% 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 be able to continue to payout at the current rate in the future?

How well does Beacon Lighting Group fit our criteria?

The company currently pays out 55.0% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. Going forward, analysts expect BLX’s payout to remain around the same level at 52.2% of its earnings, which leads to a dividend yield of around 3.9%. Moreover, EPS should increase to A$0.098.

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. Unfortunately, it is really too early to view Beacon Lighting Group as a dividend investment. It has only been consistently paying dividends for 4 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.

Compared to its peers, Beacon Lighting Group generates a yield of 3.3%, which is on the low-side for Specialty Retail stocks.

Next Steps:

If you are building an income portfolio, then Beacon Lighting Group is a complicated choice since it has some positive aspects as well as negative ones. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. 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. Below, I’ve compiled three pertinent aspects you should further research: