Important news for shareholders and potential investors in L Brands Inc (NYSE:LB): The dividend payment of $0.6 per share will be distributed into shareholder on 09 March 2018, and the stock will begin trading ex-dividend at an earlier date, 22 February 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into L Brands’s latest financial data to analyse its dividend attributes. View our latest analysis for L Brands

5 questions to ask before buying a dividend stock

When researching a dividend stock, I always follow the following screening criteria:

• Is its annual yield among the top 25% of dividend payers?

• Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?

• Has dividend per share risen in the past couple of years?

• Is it 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 does L Brands fare?

The company currently pays out 72.05% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. However, going forward, analysts expect LB’s payout to fall to 58.98% of its earnings, which leads to a dividend yield of around 5.08%. However, EPS should increase to $3.34, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Although LB’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Investors have seen reductions in the dividend per share in the past, although, it has picked up again. In terms of its peers, L Brands has a yield of 4.91%, which is high for Specialty Retail stocks.

Next Steps:

With these dividend metrics in mind, I definitely rank L Brands 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, 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 look at:

• 1. Future Outlook: What are well-informed industry analysts predicting for LB’s future growth? Take a look at our free research report of analyst consensus for LB’s outlook.

• 2. Valuation: What is LB 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 LB is currently mispriced by the market.

• 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.