Important news for shareholders and potential investors in WPP AUNZ Limited (ASX:WPP): The dividend payment of AU$0.023 per share will be distributed to shareholders on 03 October 2018, and the stock will begin trading ex-dividend at an earlier date, 25 September 2018. Is this future income a persuasive enough catalyst for investors to think about WPP AUNZ as an investment today? Below, 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 WPP AUNZ
5 checks you should use to assess a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
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Does it pay an annual yield higher than 75% of dividend payers?
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Does it consistently pay out dividends without missing a payment of significantly cutting payout?
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Has it increased its dividend per share amount 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?
How well does WPP AUNZ fit our criteria?
The current trailing twelve-month payout ratio for the stock is 83.3%, which means that the dividend is covered by earnings. In the near future, analysts are predicting lower payout ratio of 62.5%, leading to a dividend yield of around 7.9%. However, EPS should increase to A$0.096, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
When considering the sustainability of dividends, it is also worth checking the cash flow of a company. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
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. Dividend payments from WPP AUNZ have been volatile in the past 10 years, with some years experiencing significant drops of over 25%. This means that dividend hunters should probably steer clear of the stock, at least for now until the track record improves.
Relative to peers, WPP AUNZ has a yield of 7.3%, which is high for Media stocks.
Next Steps:
With these dividend metrics in mind, I definitely rank WPP AUNZ as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. Below, I’ve compiled three pertinent aspects you should look at: