Costain Group plc (LSE:COST) has pleased shareholders over the past 10 years, paying out an average dividend of 3.00% annually. The company currently pays out a dividend yield of 2.84% to shareholders, making it a relatively attractive dividend stock. Should it have a place in your portfolio? Let’s take a look at Costain Group in more detail. Check out our latest analysis for Costain Group
5 checks you should do on a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
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Is its annual yield among the top 25% of dividend payers?
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Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
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Has the amount of dividend per share grown over the past?
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Is its earnings sufficient to payout dividend at the current rate?
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Will the company be able to keep paying dividend based on the future earnings growth?
How does Costain Group fare?
The company currently pays out 46.29% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect COST’s payout to remain around the same level at 43.89% of its earnings, which leads to a dividend yield of around 3.69%. In addition to this, EPS should increase to £0.3. If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. In the case of COST it has increased its DPS from £0.05 to £0.13 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 COST a true dividend rockstar. Relative to peers, Costain Group produces a yield of 2.84%, which is on the low-side for Construction stocks.
Next Steps:
With this in mind, I definitely rank Costain Group as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. 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:
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1. Future Outlook: What are well-informed industry analysts predicting for COST’s future growth? Take a look at our free research report of analyst consensus for COST’s outlook.
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2. Valuation: What is COST 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 COST is currently mispriced by the market.
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3. Other 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.