Important news for shareholders and potential investors in GCP Student Living plc (LSE:DIGS): The dividend payment of £0.01 per share will be distributed into shareholder on 05 December 2017, and the stock will begin trading ex-dividend at an earlier date, 02 November 2017. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine DIGS’s latest financial data to analyse its dividend characteristics. Check out our latest analysis for GCP Student Living

5 questions I ask before picking a dividend stock

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

• Is it the top 25% annual dividend yield payer?

• Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?

• Has it increased its dividend per share amount over the past?

• Is is 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?

How well does GCP Student Living fit our criteria?

The current payout ratio for the stock is 71.16%, which means that the dividend is covered by earnings. Looking forward, analysts expect DIGS to pay out 96.23% of its earnings leading to a dividend yield of 4.18%.

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 GCP Student Living as a dividend investment. It has only been consistently paying dividends for 4 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. Relative to peers, DIGS generates a yield of 4.00%, which is on the low-side for a equity real estate investment trusts (reits) stock.

What this means for you:

Are you a shareholder? If DIGS is in your portfolio for cash-generating reasons, there may be better alternatives out there, preferably ones with a more robust and increasing payout over time. It may be beneficial exploring other dividend stocks as alternatives to DIGS or even look at high-growth stocks to supplement your steady income stocks. I recommend continuing your research by taking a look at my interactive free list of dividend rockstars as well as high-growth stocks to potentially add to your holdings.

Are you a potential investor? If we were to look at GCP Student Living from a perspective of a dividend stock, there isn’t much to like. But if you are not exclusively a dividend investor, DIGS could still be an interesting investment opportunity. As always, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Take a look at our latest free fundmental analysis to explore other aspects of DIGS.

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.