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On the 06 November 2018, South Port New Zealand Limited (NZSE:SPN) will be paying shareholders an upcoming dividend amount of NZ$0.22 per share. However, investors must have bought the company’s stock before 25 October 2018 in order to qualify for the payment. That means you have only 4 days left! Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into South Port New Zealand’s latest financial data to analyse its dividend attributes.
See our latest analysis for South Port New Zealand
5 checks you should use to assess a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
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Is its annual yield among the top 25% of dividend-paying companies?
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Has it paid dividend every year without dramatically reducing payout in the past?
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Has dividend per share amount increased over the past?
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Does earnings amply cover its dividend payments?
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Will it be able to continue to payout at the current rate in the future?
Does South Port New Zealand pass our checks?
The current trailing twelve-month payout ratio for the stock is 71%, which means that the dividend is 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.
When assessing the forecast sustainability of a dividend it is also worth considering 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 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. In the case of SPN it has increased its DPS from NZ$0.095 to NZ$0.26 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. This is an impressive feat, which makes SPN a true dividend rockstar.
In terms of its peers, South Port New Zealand has a yield of 3.5%, which is on the low-side for Infrastructure stocks.
Next Steps:
Keeping in mind the dividend characteristics above, South Port New Zealand 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 pertinent factors you should further research: