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Investors who want to cash in on Tristel Plc’s (LON:TSTL) upcoming dividend of UK£0.03 per share have only 4 days left to buy the shares before its ex-dividend date, 15 November 2018, in time for dividends payable on the 14 December 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into Tristel’s latest financial data to analyse its dividend attributes.

Check out our latest analysis for Tristel

Here’s how I find good dividend stocks

When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:

• Does it pay an annual yield higher than 75% of dividend payers?

• Has it paid dividend every year without dramatically reducing payout in the past?

• Has the amount of dividend per share grown over the past?

• Can it afford 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 Tristel pass our checks?

The current trailing twelve-month payout ratio for the stock is 60%, which means that the dividend is covered by earnings. However, going forward, analysts expect TSTL’s payout to fall to 52% of its earnings, which leads to a dividend yield of around 2.2%. However, EPS should increase to £0.087, 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. 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. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Shareholders would have seen a few years of reduced payments in this time.

In terms of its peers, Tristel produces a yield of 1.9%, which is on the low-side for Medical Equipment stocks.

Next Steps:

If you are building an income portfolio, then Tristel is a complicated choice since it has some positive aspects as well as negative ones. However, if you are not strictly just a dividend investor, the stock could still offer 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 key factors you should further examine: