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Attention dividend hunters! ISS A/S (CPH:ISS) will be distributing its dividend of ø7.70 per share on the 15 April 2019, and will start trading ex-dividend in 3 days time on the 11 April 2019. Should you diversify into ISS 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.

View our latest analysis for ISS

5 checks you should do on a dividend stock

Whenever I am looking at a potential dividend stock investment, I always check these five metrics:

• 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 is able to pay the current rate of dividends from its earnings?

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

Does ISS pass our checks?

The company currently pays out 117% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is not sufficiently covered by its earnings. In the near future, analysts are predicting a more sensible payout ratio of 57%, which, assuming the share price stays the same, leads to a dividend yield of around 4.2%. Moreover, EPS should increase to DKK11.89, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.

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. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.

If there's one type of stock you want to be reliable, it's dividend stocks and their stable income-generating ability. Unfortunately, it is really too early to view ISS 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, ISS produces a yield of 3.6%, which is high for Commercial Services 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 ISS 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 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 pertinent aspects you should look at: