Shares of Polar Capital Holdings plc (AIM:POLR) will begin trading ex-dividend in 3 days. To qualify for the dividend check of £0.06 per share, investors must have owned the shares prior to 28 December 2017, which is the last day the company’s management will finalize their list of shareholders to which they will send dividend payments. What does this mean for current shareholders and potential investors? Below, I will explain how holding Polar Capital Holdings can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes. See our latest analysis for Polar Capital Holdings
Here’s how I find good dividend stocks
When researching a dividend stock, I always follow the following screening criteria:
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Is it paying an annual yield above 75% of dividend payers?
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Has it consistently paid a stable dividend without missing a payment or drastically 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 the company be able to keep paying dividend based on the future earnings growth?
How does Polar Capital Holdings fare?
Polar Capital Holdings has a payout ratio of 119.64%, which means that the dividend is not well-covered by its earnings. However, going forward, analysts expect POLR’s payout to fall into a more sustainable range of 74.78% of its earnings, which leads to a dividend yield of 5.33%. Moreover, EPS should increase to £0.32, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. 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. Although POLR’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Shareholders would have seen a few years of reduced payments in this time. Relative to peers, Polar Capital Holdings produces a yield of 4.71%, which is high for capital markets stocks.
What this means for you:
Are you a shareholder? With Polar Capital Holdings producing strong dividend income for your portfolio over the past few years, you can take comfort in knowing that this stock will still continue to be a robust dividend generator moving forward. However, depending on your portfolio composition, it may be worth exploring other income stocks to enhance your diversification, or even look at high-growth stocks to complement your steady income stocks. I encourage you to continue your research by exploring my interactive free list of dividend rockstars as well as high-growth stocks to potentially add to your holdings.