Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. In the past 10 years Nutrisystem Inc (NASDAQ:NTRI) has returned an average of 4.00% per year to investors in the form of dividend payouts. Should it have a place in your portfolio? Let’s take a look at Nutrisystem in more detail. See our latest analysis for Nutrisystem

5 checks you should do on a dividend stock

If you are a dividend investor, you should always assess these five key metrics:

• Is its annual yield among the top 25% of dividend-paying companies?

• 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?

• Can it afford 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 well does Nutrisystem fit our criteria?

The current trailing twelve-month payout ratio for the stock is 37.46%, which means that the dividend is covered by earnings. In the near future, analysts are predicting lower payout ratio of 6.93%, leading to a dividend yield of 0.0081%. However, EPS should increase to $2.19, 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. NTRI investors will be well aware there has not been any increase in the dividend payments over the last 10 years, although the payments have at least been steady. Though this may not be a serious red flag, strong dividend stocks should always strive to increase its payout over time. Compared to its peers, Nutrisystem generates a yield of 1.62%, which is high for Online Retail stocks but still below the low risk savings rate.

Next Steps:

Whilst there are few things you may like about Nutrisystem from a dividend stock perspective, the truth is that overall it probably is not the best choice for a dividend investor. 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, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. Below, I’ve compiled three fundamental factors you should further examine:

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

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

• 3. 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.