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Important news for shareholders and potential investors in Shoe Zone Plc (AIM:SHOE): The dividend payment of £0.07 per share will be distributed into shareholder on 14 March 2018, and the stock will begin trading ex-dividend at an earlier date, 22 February 2018. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at Shoe Zone’s most recent financial data to examine its dividend characteristics in more detail. View our latest analysis for Shoe Zone
How I analyze a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
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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 the amount of dividend per share grown over the past?
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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 Shoe Zone fit our criteria?
The current trailing twelve-month payout ratio for the stock is 64.70%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a payout ratio of 63.07%, leading to a dividend yield of around 6.09%. Moreover, EPS should increase to £0.17. If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. Unfortunately, it is really too early to view Shoe Zone as a dividend investment. It has only been consistently paying dividends for 3 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. Compared to its peers, Shoe Zone produces a yield of 5.83%, which is high for Specialty Retail stocks.
Next Steps:
With these dividend metrics in mind, I definitely rank Shoe Zone as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. There are three key factors you should look at:
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1. Future Outlook: What are well-informed industry analysts predicting for SHOE’s future growth? Take a look at our free research report of analyst consensus for SHOE’s outlook.
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2. Valuation: What is SHOE 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 SHOE is currently mispriced by the market.
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3. 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.