If you are interested in cashing in on Benchmark Electronics Inc’s (NYSE:BHE) upcoming dividend of US$0.15 per share, you only have 2 days left to buy the shares before its ex-dividend date, 28 June 2018, in time for dividends payable on the 12 July 2018. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at Benchmark Electronics’s most recent financial data to examine its dividend characteristics in more detail. View out our latest analysis for Benchmark Electronics
5 checks you should use to assess a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
- Is it paying an annual yield above 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 risen in the past couple of years?
- 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 Benchmark Electronics pass our checks?
Benchmark Electronics has a negative payout ratio, meaning that the company is not yet profitable and is paying dividend by dipping into its retained earnings.
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. Unfortunately, it is really too early to view Benchmark Electronics 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 BHE one as a stable dividend player.
Compared to its peers, Benchmark Electronics has a yield of 1.97%, which is high for Electronic 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 Benchmark Electronics 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. I’ve put together three essential factors you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for BHE’s future growth? Take a look at our free research report of analyst consensus for BHE’s outlook.
- Valuation: What is BHE 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 BHE 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 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.