Have you been keeping an eye on Healthscope Limited’s (ASX:HSO) upcoming dividend of A$0.03 per share payable on the 23 March 2018? Then you only have 2 days left before the stock starts trading ex-dividend on the 01 March 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 Healthscope’s most recent financial data to examine its dividend characteristics in more detail. Check out our latest analysis for Healthscope
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 its annual yield among the top 25% of dividend-paying companies?
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Has it paid dividend every year without dramatically reducing payout in the past?
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Has it increased its dividend per share amount over the past?
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Can it afford to pay the current rate of dividends from its earnings?
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Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How well does Healthscope fit our criteria?
Healthscope has a trailing twelve-month payout ratio of 76.94%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a payout ratio of 70.64%, leading to a dividend yield of 4.09%. Furthermore, EPS should increase to A$0.1. 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 Healthscope as a dividend investment. It has only been consistently paying dividends for 3 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. Relative to peers, Healthscope produces a yield of 3.33%, which is high for Healthcare stocks but still below the market’s top dividend payers.
Next Steps:
If Healthscope is in your portfolio for cash-generating reasons, there may be better alternatives out there. 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 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 key aspects you should further research:
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1. Future Outlook: What are well-informed industry analysts predicting for HSO’s future growth? Take a look at our free research report of analyst consensus for HSO’s outlook.
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2. Valuation: What is HSO 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 HSO is currently mispriced by the market.
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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.