Important news for shareholders and potential investors in DS Smith Plc (LSE:SMDS): The dividend payment of £0.05 per share will be distributed into shareholder on 01 May 2018, and the stock will begin trading ex-dividend at an earlier date, 05 April 2018. What does this mean for current shareholders and potential investors? Below, I will explain how holding DS Smith can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes. See our latest analysis for DS Smith
Here’s how I find good dividend stocks
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
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Is it the top 25% annual dividend yield payer?
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Has it paid dividend every year without dramatically reducing payout in the past?
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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?
Does DS Smith pass our checks?
DS Smith has a trailing twelve-month payout ratio of 75.80%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting lower payout ratio of 46.90%, leading to a dividend yield of around 3.76%. However, EPS should increase to £0.27, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. 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. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Shareholders would have seen a few years of reduced payments in this time. In terms of its peers, DS Smith generates a yield of 3.23%, which is high for Packaging stocks but still below the market’s top dividend payers.
Next Steps:
Considering the dividend attributes we analyzed above, DS Smith is definitely worth keeping an eye on for someone looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Below, I’ve compiled three pertinent aspects you should further examine:
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Future Outlook: What are well-informed industry analysts predicting for SMDS’s future growth? Take a look at our free research report of analyst consensus for SMDS’s outlook.
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Valuation: What is SMDS 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 SMDS is currently mispriced by the market.
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Other 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.