On the 09 April 2019, Peet Limited (ASX:PPC) will be paying shareholders an upcoming dividend amount of AU$0.02 per share. However, investors must have bought the company’s stock before 21 March 2019 in order to qualify for the payment. That means you have only 4 days left!
Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into Peet’s latest financial data to analyse its dividend attributes.
5 questions to ask before buying a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
- Is its annual yield among the top 25% of dividend-paying companies?
- Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
- Has it increased its dividend per share amount over the past?
- Can it afford to pay the current rate of dividends from its earnings?
- Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
Does Peet pass our checks?
Peet has a trailing twelve-month payout ratio of 49%,
which means that the dividend is covered by earnings.
In the near future, analysts are predicting a payout ratio of 51% which, assuming the share price stays the same, leads to a
dividend yield of 4.7%.
EPS is forecasted to fall to A$0.096 in the upcoming year.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow.
A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.
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.
Dividend payments from Peet have been volatile in the past 10 years, with some years experiencing significant drops of over 25%.
This means that dividend hunters should probably steer clear of the stock, at least for now until the track record improves.
Compared to its peers,
yield of 5.1%,
which is high for Real Estate
stocks but still below the market’s top dividend payers.
Taking all the above into account, Peet is a complicated pick for dividend investors given that there are a couple of positive things about it as well as negative.
But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity.
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.
I’ve put together
- Future Outlook: What are well-informed industry analysts predicting for PPC’s future growth? Take a look at our free research report of analyst consensus for PPC’s outlook.
- Valuation: What is PPC 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 PPC is currently mispriced by the market.
- Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.