Important news for shareholders and potential investors in Personal Group Holdings Plc (LON:PGH): The dividend payment of UK£0.058 per share will be distributed to shareholders on 14 December 2018, and the stock will begin trading ex-dividend at an earlier date, 08 November 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine Personal Group Holdings’s latest financial data to analyse its dividend characteristics.

Check out our latest analysis for Personal Group Holdings

5 checks you should use to assess a dividend stock

When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:

• Is it paying an annual yield above 75% of dividend payers?

• Does it consistently pay out dividends without missing a payment of significantly cutting payout?

• Has it increased its dividend per share amount over the past?

• Does earnings amply cover its dividend payments?

• Based on future earnings growth, will it be able to continue to payout dividend at the current rate?

Does Personal Group Holdings pass our checks?

The company currently pays out 80% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward.

When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.

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. PGH has increased its DPS from £0.13 to £0.23 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.

In terms of its peers, Personal Group Holdings produces a yield of 4.5%, which is on the low-side for Insurance stocks.

Next Steps:

With these dividend metrics in mind, I definitely rank Personal Group Holdings 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 pertinent factors you should look at: