Investors who want to cash in on ADTRAN Inc’s (NASDAQ:ADTN) upcoming dividend of $0.09 per share have only 3 days left to buy the shares before its ex-dividend date, 31 October 2017, in time for dividends payable on the 15 November 2017. So if you want to cash in on ADTN’s dividend payment and are not yet a shareholder, you have only few days left! Today I am going to take a look at ADTN’s most recent financial data to examine its dividend characteristics in more detail. See our latest analysis for ADTN
5 questions to ask before buying a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
- Is their annual yield among the top 25% of dividend payers?
- 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?
- 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?
How does ADTRAN fare?
The current payout ratio for the stock is 40.79%, which means that the dividend is covered by earnings. Looking forward, analysts expect ADTN to pay out 25.84% of its earnings leading to a dividend yield of 1.71%. Moreover, EPS should increase to $0.95. This means the company should be able to continue to payout dividends. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. ADTN investors will be well aware there has not been any increase in the dividend payments over the last 10 years, although the payments have at least been steady. However, income investors that value stability over growth may still find ADTN appealing. Compared to its peers, ADTN generates a yield of 1.71%, which is on the low-side for a communications equipment stock.
What this means for you:
Are you a shareholder? Whilst there are few things you may like about ADTRAN from a dividend stock perspective, the truth is that overall it probably is not the best choice for a dividend investor. It may be worth exploring other dividend stocks as alternatives to ADTN or even look at high-growth stocks to supplement your steady income stocks. I encourage you to continue your research by checking out my interactive free list of dividend rockstars as well as high-growth stocks to potentially add to your holdings.
Are you a potential investor? Taking all the above into account, ADTRAN is a complicated pick for dividend investors given that there are a couple of positive things about it as well as negative. But if you are not exclusively a dividend investor, ADTN could still be an interesting investment opportunity. As always, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Dig deeping in our latest free fundmental analysis to explore other aspects of ADTN.
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.