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A large part of investment returns can be generated by dividend-paying stock given their role in compounding returns over time. Over the past 10 years, ComfortDelGro Corporation Limited (SGX:C52) has returned an average of 4.00% per year to shareholders in terms of dividend yield. Should it have a place in your portfolio? Let’s take a look at ComfortDelGro in more detail. See our latest analysis for ComfortDelGro

5 checks you should use to assess a dividend stock

When researching a dividend stock, I always follow the following screening criteria:

• 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 dividend per share amount increased over the past?

• Is it able 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?

Does ComfortDelGro pass our checks?

ComfortDelGro has a trailing twelve-month payout ratio of 74.55%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a payout ratio of 74.15%, leading to a dividend yield of 5.25%. Furthermore, EPS is forecasted to fall to SGD0.14 in the upcoming year. 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 ComfortDelGro have been volatile in the past 10 years, with some years experiencing significant drops of over 25%. These characteristics do not bode well for income investors seeking reliable stream of dividends. In terms of its peers, ComfortDelGro generates a yield of 5.15%, which is high for Transportation stocks.

Next Steps:

Considering the dividend attributes we analyzed above, ComfortDelGro is definitely worth keeping an eye on for someone looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, 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. There are three pertinent aspects you should further research:

1. Future Outlook: What are well-informed industry analysts predicting for C52’s future growth? Take a look at our free research report of analyst consensus for C52’s outlook.

2. Valuation: What is C52 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 C52 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 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.