Have you been keeping an eye on Morgan Sindall Group plc's (LON:MGNS) upcoming dividend of UK£0.34 per share payable on the 20 May 2019? Then you only have 3 days left before the stock starts trading ex-dividend on the 25 April 2019. What does this mean for current shareholders and potential investors? Below, I will explain how holding Morgan Sindall Group can impact your portfolio income stream, by analysing the stock's most recent financial data and dividend attributes.
5 checks you should do on a dividend stock
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 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?
- Is is able to pay the current rate of dividends from its earnings?
- Will it have the ability to keep paying its dividends going forward?
How does Morgan Sindall Group fare?
The current trailing twelve-month payout ratio for the stock is 35%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a payout ratio of 38% which, assuming the share price stays the same, leads to a dividend yield of 4.4%. Furthermore, EPS is forecasted to fall to £1.39 in the upcoming year.
When considering the sustainability of dividends, it is also worth checking the cash flow of a company. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.
Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. Although MGNS's per share payments have increased in the past 10 years, it has not been a completely smooth ride. Investors have seen reductions in the dividend per share in the past, although, it has picked up again.
In terms of its peers, Morgan Sindall Group generates a yield of 4.0%, which is on the low-side for Construction stocks.
Considering the dividend attributes we analyzed above, Morgan Sindall Group is definitely worth keeping an eye on for someone looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. I've put together three important aspects you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for MGNS’s future growth? Take a look at our free research report of analyst consensus for MGNS’s outlook.
- Valuation: What is MGNS 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 MGNS 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 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.