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Dividends can be underrated but they form a large part of investment returns, playing an important role in compounding returns in the long run. MyState Limited (ASX:MYS) has returned to shareholders over the past 8 years, an average dividend yield of 6.00% annually. Does MyState tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. Check out our latest analysis for MyState
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:
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Does it pay an annual yield higher than 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 dividend per share risen in the past couple of years?
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Is it able to pay the current rate of dividends from its earnings?
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Will the company be able to keep paying dividend based on the future earnings growth?
How well does MyState fit our criteria?
The company currently pays out 83.76% 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 MYS’s payout to remain around the same level at 88.33% of its earnings, which leads to a dividend yield of 6.81%. In addition to this, EPS should increase to A$0.36. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Unfortunately, it is really too early to view MyState as a dividend investment. It has only been consistently paying dividends for 8 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. In terms of its peers, MyState generates a yield of 6.03%, which is high for Mortgage stocks.
Next Steps:
With this in mind, I definitely rank MyState 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. Below, I’ve compiled three pertinent factors you should look at:
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Future Outlook: What are well-informed industry analysts predicting for MYS’s future growth? Take a look at our free research report of analyst consensus for MYS’s outlook.
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Valuation: What is MYS 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 MYS 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 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.