On the 28 March 2018, 1300SMILES Limited (ASX:ONT) will be paying shareholders an upcoming dividend amount of A$0.12 per share. However, investors must have bought the company’s stock before 19 March 2018 in order to qualify for the payment. That means you have only 8 days left! Is this future income a persuasive enough catalyst for investors to think about 1300SMILES 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. See our latest analysis for 1300SMILES

5 questions to ask before buying 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 consistently paid a stable dividend without missing a payment or drastically cutting payout?

• Has dividend per share amount increased over the past?

• Is its earnings sufficient to payout dividend at the current rate?

• Will the company be able to keep paying dividend based on the future earnings growth?

How does 1300SMILES fare?

The company currently pays out 75.75% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. However, going forward, analysts expect ONT’s payout to fall to 67.52% of its earnings, which leads to a dividend yield of around 4.29%. However, EPS should increase to A$0.37, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. Although ONT’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Investors have seen reductions in the dividend per share in the past, although, it has picked up again. Relative to peers, 1300SMILES produces a yield of 3.58%, which is high for Healthcare stocks but still below the market’s top dividend payers.

Next Steps:

With this in mind, I definitely rank 1300SMILES as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. 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. There are three relevant aspects you should further research: