Important news for shareholders and potential investors in ResMed Inc (NYSE:RMD): The dividend payment of $0.35 per share will be distributed into shareholder on 14 December 2017, and the stock will begin trading ex-dividend at an earlier date, 08 November 2017. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into RMD’s latest financial data to analyse its dividend attributes. See our latest analysis for RMD
5 questions I ask before picking a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five 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 it increased its dividend per share amount over the past?
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Can it afford to pay the current rate of dividends from its earnings?
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Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How well does ResMed fit our criteria?
The company currently pays out 54.71% of its earnings as a dividend, which means that the dividend is covered by earnings. Looking forward, analysts expect RMD to pay out 47.13% of its earnings and dividends yield to be around 1.92%. Moreover, EPS should increase to $2.93. This means the company should be able to continue to payout dividends. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Unfortunately, it is really too early to view ResMed as a dividend investment. It has only been consistently paying dividends for 5 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. Relative to peers, RMD generates a yield of 1.69%, which is high for healthcare equipment and supplies stocks but still below the low risk savings rate.
What this means for you:
Are you a shareholder? Investors may not have the best feeling about their investment in RMD right now, in terms of its dividend attributes. It may be beneficial exploring other dividend stocks as alternatives to RMD or even look at high-growth stocks to complement your steady income stocks. I recommend continuing your research by exploring my interactive free list of dividend rockstars as well as high-growth stocks to potentially add to your holdings.
Are you a potential investor? Now you know to keep in mind the reason why investors should be careful investing in RMD for the dividend. On the other hand, if you are not strictly just a dividend investor, RMD could still be offering some interesting investment opportunities. I also recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. Dig deeper in our latest free fundmental analysis to explore other aspects of RMD.
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.