Shares of EMC Insurance Group Inc (NASDAQ:EMCI) will begin trading ex-dividend in 2 days. To qualify for the dividend check of US$0.22 per share, investors must have owned the shares prior to 31 August 2018, 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 EMC Insurance Group can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes.
5 checks you should use to assess a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
- Is it the top 25% annual dividend yield payer?
- Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
- Has dividend per share risen in the past couple of years?
- 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 EMC Insurance Group pass our checks?
The current trailing twelve-month payout ratio for the stock is 85.4%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting lower payout ratio of 70.4%, leading to a dividend yield of 3.6%. Furthermore, EPS is also forecasted to fall to $1.0 in the upcoming year. The lower EPS on top of a lower payout ratio will lead to a fall in dividend payment 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. EMCI has increased its DPS from $0.48 to $0.88 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock.
Relative to peers, EMC Insurance Group has a yield of 3.4%, which is high for Insurance stocks but still below the market’s top dividend payers.
With this in mind, I definitely rank EMC Insurance 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 urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. I’ve put together three key factors you should look at:
- Future Outlook: What are well-informed industry analysts predicting for EMCI’s future growth? Take a look at our free research report of analyst consensus for EMCI’s outlook.
- Valuation: What is EMCI 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 EMCI is currently mispriced by the market.
- 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 email@example.com.