Have you been keeping an eye on The Weir Group PLC’s (LON:WEIR) upcoming dividend of UK£0.16 per share payable on the 02 November 2018? Then you only have 4 days left before the stock starts trading ex-dividend on the 11 October 2018. Should you diversify into Weir Group 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 Weir Group

5 checks you should use to assess a dividend stock

Whenever I am looking at a potential dividend stock investment, I always check these five metrics:

• Is it the top 25% annual dividend yield payer?

• Has it paid dividend every year without dramatically reducing payout in the past?

• Has the amount of dividend per share grown over the past?

• Is is able to pay the current rate of dividends from its earnings?

• Will it have the ability to keep paying its dividends going forward?

Does Weir Group pass our checks?

The current trailing twelve-month payout ratio for the stock is 62%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting lower payout ratio of 36%, leading to a dividend yield of 2.8%. However, EPS should increase to £0.95, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.

If you want to dive deeper into the sustainability of a certain payout ratio, you may wish to consider 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. WEIR has increased its DPS from £0.17 to £0.44 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock.

Relative to peers, Weir Group has a yield of 2.5%, which is on the low-side for Machinery stocks.

Next Steps:

With these dividend metrics in mind, I definitely rank Weir Group 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, 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 relevant factors you should look at: