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Important news for shareholders and potential investors in Erie Indemnity Company (NASDAQ:ERIE): The dividend payment of $0.84 per share will be distributed into shareholder on 20 April 2018, and the stock will begin trading ex-dividend at an earlier date, 05 April 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into Erie Indemnity’s latest financial data to analyse its dividend attributes. See our latest analysis for Erie Indemnity
How I analyze a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
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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 or significantly cutting payout?
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Has dividend per share amount increased over the past?
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Can it afford to pay the current rate of dividends from its earnings?
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Will it have the ability to keep paying its dividends going forward?
How well does Erie Indemnity fit our criteria?
The company currently pays out 84.60% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. In the near future, analysts are predicting lower payout ratio of 60.54%, leading to a dividend yield of 2.66%. However, EPS should increase to $4.91, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. In the case of ERIE it has increased its DPS from $1.76 to $3.36 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. This is an impressive feat, which makes ERIE a true dividend rockstar. Compared to its peers, Erie Indemnity produces a yield of 2.86%, which is on the low-side for Insurance stocks.
Next Steps:
Considering the dividend attributes we analyzed above, Erie Indemnity is definitely worth keeping an eye on for someone looking to build a dedicated income portfolio. 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. I’ve put together three important aspects you should look at:
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Future Outlook: What are well-informed industry analysts predicting for ERIE’s future growth? Take a look at our free research report of analyst consensus for ERIE’s outlook.
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Valuation: What is ERIE 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 ERIE is currently mispriced by the market.
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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.