4 Days Left Before Element Fleet Management Corp (TSE:EFN) Will Be Trading Ex-Dividend,
Important news for shareholders and potential investors in Element Fleet Management Corp (TSE:EFN): The dividend payment of CA$0.075 per share will be distributed to shareholders on 15 October 2018, and the stock will begin trading ex-dividend at an earlier date, 27 September 2018. Should you diversify into Element Fleet Management 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.
See our latest analysis for Element Fleet Management
5 checks you should use to assess a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
Is its annual yield among the top 25% of dividend-paying companies?
Does it consistently pay out dividends without missing a payment of significantly cutting payout?
Has it increased its dividend per share amount 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?
Does Element Fleet Management pass our checks?
The company currently pays out 93.6% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is not sufficiently covered by its earnings. However, going forward, analysts expect EFN’s payout to fall into a more sustainable range of 38.0% of its earnings, which leads to a dividend yield of 4.3%. In addition to this, EPS should increase to CA$0.52, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Unfortunately, it is really too early to view Element Fleet Management as a dividend investment. It has only been consistently paying dividends for 3 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
Compared to its peers, Element Fleet Management generates a yield of 4.3%, which is high for Diversified Financial stocks but still below the market’s top dividend payers.
Next Steps:
After digging a little deeper into Element Fleet Management’s yield, it’s easy to see why you should be cautious investing in the company just 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 recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. There are three key factors you should further research:
Future Outlook: What are well-informed industry analysts predicting for EFN’s future growth? Take a look at our free research report of analyst consensus for EFN’s outlook.
Valuation: What is EFN 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 EFN 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.
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 editorial-team@simplywallst.com.
