If you are interested in cashing in on Cedar Woods Properties Limited’s (ASX:CWP) upcoming dividend of AU$0.18 per share, you only have 4 days left to buy the shares before its ex-dividend date, 26 September 2018, in time for dividends payable on the 26 October 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine Cedar Woods Properties’s latest financial data to analyse its dividend characteristics.

Check out our latest analysis for Cedar Woods Properties

5 questions to ask before buying a dividend stock

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

• Is its annual yield among the top 25% of dividend-paying companies?

• 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?

• Can it afford to pay the current rate of dividends from its earnings?

• Based on future earnings growth, will it be able to continue to payout dividend at the current rate?

How does Cedar Woods Properties fare?

Cedar Woods Properties has a trailing twelve-month payout ratio of 55.6%, which means that the dividend is covered by earnings. Going forward, analysts expect CWP’s payout to remain around the same level at 50.1% of its earnings, which leads to a dividend yield of 6.1%. In addition to this, EPS should increase to A$0.67.

If you want to dive deeper into the sustainability of a certain payout ratio, you may wish to consider the cash flow of the business. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.

If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Although CWP’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Shareholders would have seen a few years of reduced payments in this time.

Relative to peers, Cedar Woods Properties has a yield of 5.0%, which is high for Real Estate stocks but still below the market’s top dividend payers.

Next Steps:

With this in mind, I definitely rank Cedar Woods Properties as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. 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 relevant aspects you should look at:

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

2. Valuation: What is CWP 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 CWP is currently mispriced by the market.

3. 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 past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.