Investors who want to cash in on Alfa Laval AB (publ)'s (STO:ALFA) upcoming dividend of kr5.00 per share have only 3 days left to buy the shares before its ex-dividend date, 25 April 2019, in time for dividends payable on the 02 May 2019. Should you diversify into Alfa Laval 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.
Here's how I find good dividend stocks
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?
- Has it consistently paid a stable dividend without missing a payment or drastically 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 it have the ability to keep paying its dividends going forward?
How does Alfa Laval fare?
The current trailing twelve-month payout ratio for the stock is 46%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect ALFA's payout to remain around the same level at 44% of its earnings. Assuming a constant share price, this equates to a dividend yield of 2.5%. In addition to this, EPS should increase to SEK11.96.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.
If there is one thing that you want to be reliable in your life, it's dividend stocks and their constant income stream. In the case of ALFA it has increased its DPS from SEK2.25 to SEK5 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 ALFA a true dividend rockstar.
Relative to peers, Alfa Laval has a yield of 2.2%, which is on the low-side for Machinery stocks.
Considering the dividend attributes we analyzed above, Alfa Laval is definitely worth keeping an eye on for someone looking to build a dedicated income portfolio. 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 three important aspects you should further research:
- Future Outlook: What are well-informed industry analysts predicting for ALFA’s future growth? Take a look at our free research report of analyst consensus for ALFA’s outlook.
- Valuation: What is ALFA 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 ALFA 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.
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 firstname.lastname@example.org. 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.