Attention dividend hunters! CSR Limited (ASX:CSR) will be distributing its dividend of A$0.14 per share in 3 days time, on the 12 December 2017, and will start trading ex-dividend on the 10 November 2017. What does this mean for current shareholders and potential investors? Below, I will explain how holding CSR can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes. Check out our latest analysis for CSR

5 checks you should use to assess a dividend stock

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

• Is it the top 25% annual dividend yield payer?

• Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?

• Has it increased its dividend per share amount over the past?

• Is is able to pay the current rate of dividends from its earnings?

• Will the company be able to keep paying dividend based on the future earnings growth?

How well does CSR fit our criteria?

The current payout ratio for the stock is 73.26%, meaning the dividend is sufficiently covered by earnings. Looking forward, analysts expect CSR to pay out 70.70% of its earnings leading to a dividend yield of 5.08%. Furthermore, EPS should decrease to A$0.35. This means the company should be able to continue to payout dividends. 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. Dividend payments from CSR have been volatile in the past 10 years, with some years experiencing significant drops of over 25%. This means that dividend hunters should probably steer clear of the stock, at least for now until the track record improves. Relative to peers, CSR produces a yield of 5.83%, which is high for construction materials stocks.

What this means for you:

Are you a shareholder? If CSR is in your portfolio for cash-generating reasons, there may be better alternatives out there, preferably ones with a more robust and increasing payout over time. It may be beneficial exploring other income stocks as alternatives to CSR or even look at high-growth stocks to supplement your steady income stocks. I recommend continuing your research by checking out my interactive free list of dividend rockstars as well as high-growth stocks to potentially add to your holdings.

Are you a potential investor? For a dividend investor CSR is probably not the best pick. But if you are not exclusively a dividend investor, CSR could still be an interesting investment opportunity. As with all investments, 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. Check our latest free fundmental analysis to explore other aspects of CSR.

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.