Attention dividend hunters! Tile Shop Holdings Inc (NASDAQ:TTS) will be distributing its dividend of $0.05 per share on the 11 May 2018, and will start trading ex-dividend in 3 days time on the 27 April 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine Tile Shop Holdings’s latest financial data to analyse its dividend characteristics. View our latest analysis for Tile Shop Holdings
5 questions I ask before picking a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
- Does it pay an annual yield higher than 75% of dividend payers?
- Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
- Has dividend per share amount increased over the past?
- Can it afford to pay the current rate of dividends from its earnings?
- Will the company be able to keep paying dividend based on the future earnings growth?
Does Tile Shop Holdings pass our checks?
The company currently pays out 150.79% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is not sufficiently covered by its earnings. In the near future, analysts are predicting a more sensible payout ratio of 79.81%, leading to a dividend yield of 3.33%. In addition to this, EPS should increase to $0.2, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. 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. Unfortunately, it is really too early to view Tile Shop Holdings as a dividend investment. It has only been paying out dividend for the past one year. Generally, the rule of thumb for determining whether a stock is a reliable dividend payer is that it should be consistently paying dividends for the past 10 years or more. Clearly there’s a long road ahead before we can ascertain whether TTS one as a stable dividend player. Relative to peers, Tile Shop Holdings has a yield of 3.33%, which is high for Specialty Retail stocks but still below the market’s top dividend payers.
Now you know to keep in mind the reason why investors should be careful investing in Tile Shop Holdings for the dividend. On the other hand, if you are not strictly just a dividend investor, the stock could still be offering some interesting investment opportunities. 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. Below, I’ve compiled three key factors you should further research:
- Future Outlook: What are well-informed industry analysts predicting for TTS’s future growth? Take a look at our free research report of analyst consensus for TTS’s outlook.
- Historical Performance: What has TTS’s returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- 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.