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Shares of GKN plc (LSE:GKN) will begin trading ex-dividend in 5 days. To qualify for the dividend check of £0.06 per share, investors must have owned the shares prior to 05 April 2018, which is the last day the company’s management will finalize their list of shareholders to which they will send dividend payments. Should you diversify into GKN 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. Check out our latest analysis for GKN
5 checks you should do on a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
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Is its annual yield among the top 25% of dividend-paying companies?
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Does it consistently pay out dividends without missing a payment of significantly cutting payout?
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Has dividend per share risen in the past couple of years?
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Is its earnings sufficient to payout dividend at the current rate?
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Will it have the ability to keep paying its dividends going forward?
How well does GKN fit our criteria?
The current trailing twelve-month payout ratio for the stock is 31.70%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect GKN’s payout to remain around the same level at 29.61% of its earnings, which leads to a dividend yield of 2.36%. Furthermore, EPS is forecasted to fall to £0.25 in the upcoming year. If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Not only have dividend payouts from GKN fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. This means that dividend hunters should probably steer clear of the stock, at least for now until the track record improves. Compared to its peers, GKN produces a yield of 2.01%, which is on the low-side for Auto Components stocks.
Next Steps:
If you are building an income portfolio, then GKN is a complicated choice since it has some positive aspects as well as negative ones. 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. I’ve put together three essential factors you should further research: