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Attention dividend hunters! Amgen Inc (NASDAQ:AMGN) will be distributing its dividend of $1.32 per share on the 08 March 2018, and will start trading ex-dividend in 3 days time on the 14 February 2018. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at Amgen’s most recent financial data to examine its dividend characteristics in more detail. See our latest analysis for Amgen
5 checks you should do on 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 their annual yield among the top 25% 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 the amount of dividend per share grown over the past?
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Can it afford to pay the current rate of dividends from its earnings?
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Will the company be able to keep paying dividend based on the future earnings growth?
Does Amgen pass our checks?
The current trailing twelve-month payout ratio for AMGN is 169.91%, meaning the dividend is not sufficiently covered by its earnings. In the near future, analysts are predicting a more sensible payout ratio of 38.87%, leading to a dividend yield of 3.14%. Furthermore, EPS should increase to $11.89, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. 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 Amgen as a dividend investment. It has only been consistently paying dividends for 7 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. Relative to peers, Amgen has a yield of 3.04%, which is high for Biotechs stocks but still below the market’s top dividend payers.
Next Steps:
After digging a little deeper into Amgen’s yield, it’s easy to see why you should be cautious investing in the company just 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, 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. I’ve put together three pertinent aspects you should further research: