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Attention dividend hunters! First Resources Limited (SGX:EB5) will be distributing its dividend of US$0.02 per share on the 16 May 2019, and will start trading ex-dividend in 1 days time on the 08 May 2019. Should you diversify into First Resources and boost your portfolio income stream? Well, keep on reading because today, I'm going to look at the latest data and analyze the stock and its dividend property in further detail.
See our latest analysis for First Resources
5 checks you should use to assess a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
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Is it the top 25% annual dividend yield payer?
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Does it consistently pay out dividends without missing a payment of significantly cutting payout?
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Has it increased its dividend per share amount over the past?
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Does earnings amply cover its dividend payments?
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Will it be able to continue to payout at the current rate in the future?
Does First Resources pass our checks?
First Resources has a trailing twelve-month payout ratio of 31%, which means that the dividend is covered by earnings. Going forward, analysts expect EB5's payout to increase to 58% of its earnings. Assuming a constant share price, this equates to a dividend yield of 2.9%. In addition to this, EPS should increase to $0.10. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.
If there is one thing that you want to be reliable in your life, it's dividend stocks and their constant income stream. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Shareholders would have seen a few years of reduced payments in this time.
Relative to peers, First Resources has a yield of 1.8%, which is on the low-side for Food stocks.
Next Steps:
If First Resources is in your portfolio for cash-generating reasons, there may be better alternatives out there. 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, 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 relevant aspects you should look at: