A large part of investment returns can be generated by dividend-paying stock given their role in compounding returns over time. Historically, Constructions Industrielles de la Méditerranée (EPA:COM) has paid a dividend to shareholders. It currently yields 6.2%. Let's dig deeper into whether Constructions Industrielles de la Méditerranée should have a place in your portfolio.

Check out our latest analysis for Constructions Industrielles de la Méditerranée

How I analyze a dividend stock

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

• Is it paying an annual yield above 75% of dividend payers?

• Has it paid dividend every year without dramatically reducing payout in the past?

• Has dividend per share amount increased over the past?

• Is its earnings sufficient to payout dividend at the current rate?

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

How does Constructions Industrielles de la Méditerranée fare?

The company currently pays out 51% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward.

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.

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. Although COM'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.

Compared to its peers, Constructions Industrielles de la Méditerranée produces a yield of 6.2%, which is high for Commercial Services stocks.

Next Steps:

Keeping in mind the dividend characteristics above, Constructions Industrielles de la Méditerranée is definitely worth considering for investors looking to build a dedicated income 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. Below, I've compiled three fundamental aspects you should further examine: