A large part of investment returns can be generated by dividend-paying stock given their role in compounding returns over time. In the past 10 years Vianet Group plc (AIM:VNET) has returned an average of 5.00% per year to investors in the form of dividend payouts. Does Vianet Group tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. See our latest analysis for Vianet Group
How I analyze a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
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Does it pay an annual yield higher than 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 it increased its dividend per share amount over the past?
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Is it able to pay the current rate of dividends from its earnings?
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Will it be able to continue to payout at the current rate in the future?
How does Vianet Group fare?
Vianet Group has a trailing twelve-month payout ratio of 184.61%, meaning the dividend is not sufficiently covered by its 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. If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. VNET has increased its DPS from £0.03 to £0.06 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. This is an impressive feat, which makes VNET a true dividend rockstar. Compared to its peers, Vianet Group has a yield of 4.34%, which is high for Electronic stocks.
Next Steps:
Taking into account the dividend metrics, Vianet Group ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. There are three relevant aspects you should look at:
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Future Outlook: What are well-informed industry analysts predicting for VNET’s future growth? Take a look at our free research report of analyst consensus for VNET’s outlook.
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Valuation: What is VNET 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 VNET 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.