On the 14 May 2018, GKN plc (LSE:GKN) will be paying shareholders an upcoming dividend amount of £0.06 per share. However, investors must have bought the company’s stock before 05 April 2018 in order to qualify for the payment. That means you have only 3 days left! Should you diversify into GKN and boost your portfolio income stream? Well, keep on reading because today, I’m going to look at the latest data and analyze the stock and its dividend property in further detail. See our latest analysis for GKN

How I analyze a dividend stock

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

• 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 the amount of dividend per share grown over the past?

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

• Will it be able to continue to payout at the current rate in the future?

Does GKN pass our checks?

GKN has a trailing twelve-month payout ratio of 31.70%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a payout ratio of 29.61%, leading to a dividend yield of around 2.36%. Furthermore, EPS is forecasted to fall to £0.25 in the upcoming year. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Dividend payments from GKN 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. Compared to its peers, GKN has a yield of 2.01%, which is on the low-side for Auto Components stocks.

Next Steps:

If GKN is in your portfolio for cash-generating reasons, there may be better alternatives out there. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Below, I’ve compiled three important factors you should further examine:

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

• Valuation: What is GKN 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 GKN is currently mispriced by the market.

• 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.