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Have you been keeping an eye on Pinnacle Investment Management Group Limited’s (ASX:PNI) upcoming dividend of AU$0.07 per share payable on the 05 October 2018? Then you only have 2 days left before the stock starts trading ex-dividend on the 20 September 2018. Is this future income a persuasive enough catalyst for investors to think about Pinnacle Investment Management Group as an investment today? Below, I’m going to look at the latest data and analyze the stock and its dividend property in further detail.
Check out our latest analysis for Pinnacle Investment Management Group
5 checks you should do on a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
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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 dividend per share amount increased 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?
How does Pinnacle Investment Management Group fare?
The current trailing twelve-month payout ratio for the stock is 81.1%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a payout ratio of 88.5%, leading to a dividend yield of 3.3%. Furthermore, EPS should increase to A$0.20.
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’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Although PNI’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Shareholders would have seen a few years of reduced payments in this time.
Relative to peers, Pinnacle Investment Management Group has a yield of 1.6%, which is on the low-side for Capital Markets stocks.
Next Steps:
Taking all the above into account, Pinnacle Investment Management Group is a complicated pick for dividend investors given that there are a couple of positive things about it as well as negative. 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 key factors you should further research: