Should The Berkeley Group Holdings plc (LON:BKG) Be Part Of Your Dividend Portfolio?
A sizeable part of portfolio returns can be produced by dividend stocks due to their contribution to compounding returns in the long run. In the past 5 years The Berkeley Group Holdings plc (LSE:BKG) has returned an average of 5.00% per year to investors in the form of dividend payouts. Let’s dig deeper into whether Berkeley Group Holdings should have a place in your portfolio. Check out our latest analysis for Berkeley Group Holdings
5 checks you should do on a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
Is their annual yield among the top 25% of dividend payers?
Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
Has dividend per share amount increased over the past?
Is it able to pay the current rate of dividends from its earnings?
Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How well does Berkeley Group Holdings fit our criteria?
Berkeley Group Holdings has a trailing twelve-month payout ratio of 19.44%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect BKG’s payout to increase to 58.81% of its earnings, which leads to a dividend yield of around 4.75%. However, EPS is forecasted to fall to £4.43 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income. 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. The reality is that it is too early to consider Berkeley Group Holdings as a dividend investment. It has only been consistently paying dividends for 5 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. Compared to its peers, Berkeley Group Holdings generates a yield of 2.54%, which is on the low-side for Consumer Durables stocks.
Next Steps:
If you are building an income portfolio, then Berkeley Group Holdings is a complicated choice since it has some positive aspects as well as negative ones. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. 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. I’ve put together three key factors you should further examine:
Future Outlook: What are well-informed industry analysts predicting for BKG’s future growth? Take a look at our free research report of analyst consensus for BKG’s outlook.
Valuation: What is BKG 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 BKG 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.
