Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. Over the past 10 years, Platinum Investment Management Limited (ASX:PTM) has returned an average of 5.00% per year to shareholders in terms of dividend yield. Let’s dig deeper into whether Platinum Investment Management should have a place in your portfolio. Check out our latest analysis for Platinum Investment Management
5 questions I ask before picking a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
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Is their annual yield among the top 25% of dividend payers?
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Has it paid dividend every year without dramatically reducing payout in the past?
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Has the amount of dividend per share grown over the past?
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Does earnings amply cover its dividend payments?
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Will the company be able to keep paying dividend based on the future earnings growth?
How does Platinum Investment Management fare?
The current trailing twelve-month payout ratio for PTM is 94.11%, which means that the dividend is not well-covered by its earnings. Going forward, analysts expect PTM’s payout to remain around the same level at 95.56% of its earnings, which leads to a dividend yield of around 5.47%. Moreover, EPS should increase to A$0.34. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Investors have seen reductions in the dividend per share in the past, although, it has picked up again. In terms of its peers, Platinum Investment Management has a yield of 5.11%, which is high for Capital Markets stocks but still below the market’s top dividend payers.
Next Steps:
Now you know to keep in mind the reason why investors should be careful investing in Platinum Investment Management for the dividend. On the other hand, if you are not strictly just a dividend investor, the stock could still be offering some interesting investment opportunities. 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. I’ve put together three fundamental aspects you should further research:
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Future Outlook: What are well-informed industry analysts predicting for PTM’s future growth? Take a look at our free research report of analyst consensus for PTM’s outlook.
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Valuation: What is PTM 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 PTM is currently mispriced by the market.
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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.