Attention dividend hunters! Samuel Heath & Sons PLC (AIM:HSM) will be distributing its dividend of £0.06 per share on the 23 March 2018, and will start trading ex-dividend in 3 days time on the 22 February 2018. What does this mean for current shareholders and potential investors? Below, I will explain how holding Samuel Heath & Sons can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes. View our latest analysis for Samuel Heath & Sons
5 questions I ask before picking a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
-
Does it pay an annual yield higher than 75% of dividend payers?
-
Does it consistently pay out dividends without missing a payment of significantly cutting payout?
-
Has the amount of dividend per share grown over the past?
-
Is is able to pay the current rate of dividends from its earnings?
-
Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How well does Samuel Heath & Sons fit our criteria?
The company currently pays out 31.68% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently 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. 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 Samuel Heath & Sons 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, Samuel Heath & Sons produces a yield of 2.66%, which is on the low-side for Building stocks.
Next Steps:
After digging a little deeper into Samuel Heath & Sons’s yield, it’s easy to see why you should be cautious investing in the company just for the dividend. 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. There are three pertinent aspects you should look at:
-
1. Valuation: What is HSM 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 HSM is currently mispriced by the market.
-
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Samuel Heath & Sons’s board and the CEO’s back ground.
-
3. 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.