Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. Historically, M1 Limited (SGX:B2F) has paid a dividend to shareholders. It currently yields 7.1%. Does M1 tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis.
View our latest analysis for M1
5 questions to ask before buying a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
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Is it paying an annual yield above 75% 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 is able to pay the current rate of dividends from its earnings?
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Will it have the ability to keep paying its dividends going forward?
How does M1 fare?
M1 has a trailing twelve-month payout ratio of 79.3%, which means that the dividend is covered by earnings. Going forward, analysts expect B2F’s payout to remain around the same level at 78.8% of its earnings, which leads to a dividend yield of around 5.9%. In addition to this, EPS is forecasted to fall to SGD0.13 in the upcoming year.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Not only have dividend payouts from M1 fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. These characteristics do not bode well for income investors seeking reliable stream of dividends.
Relative to peers, M1 generates a yield of 7.1%, which is high for Wireless Telecom stocks.
Next Steps:
With this in mind, I definitely rank M1 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 recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. There are three important factors you should further research:
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Future Outlook: What are well-informed industry analysts predicting for B2F’s future growth? Take a look at our free research report of analyst consensus for B2F’s outlook.
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Valuation: What is B2F 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 B2F is currently mispriced by the market.
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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 past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.