Attention dividend hunters! Staffline Group plc (LON:STAF) will be distributing its dividend of UK£0.11 per share on the 13 November 2018, and will start trading ex-dividend in 4 days time on the 11 October 2018. Should you diversify into Staffline Group and boost your portfolio income stream? Well, keep on reading because today, I’m going to look at the latest data and analyze the stock and its dividend property in further detail.

View our latest analysis for Staffline Group

5 questions to ask before buying a dividend stock

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

• Is their annual yield among the top 25% of dividend payers?

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

• Has the amount of dividend per share grown 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?

Does Staffline Group pass our checks?

Staffline Group has a trailing twelve-month payout ratio of 30%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting lower payout ratio of 24%, leading to a dividend yield of 2.5%. However, EPS should increase to £0.92, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.

When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.

If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Although STAF’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, Staffline Group generates a yield of 2.2%, which is on the low-side for Professional Services stocks.

Next Steps:

With this in mind, I definitely rank Staffline Group 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, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. I’ve put together three relevant aspects you should further examine:

1. Future Outlook: What are well-informed industry analysts predicting for STAF’s future growth? Take a look at our free research report of analyst consensus for STAF’s outlook.

2. Valuation: What is STAF 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 STAF is currently mispriced by the market.

3. 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 past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.