A large part of investment returns can be generated by dividend-paying stock given their role in compounding returns over time. Bluegreen Vacations Corporation (NYSE:BXG) has started paying a dividend to shareholders. It currently trades on a yield of 4.7%. Does Bluegreen Vacations tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis.
5 checks you should use to assess 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 its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
- Has it increased its dividend per share amount over the past?
- Does earnings amply cover its dividend payments?
- Will it have the ability to keep paying its dividends going forward?
How well does Bluegreen Vacations fit our criteria?
The current trailing twelve-month payout ratio for the stock is 51%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a payout ratio of 51% which, assuming the share price stays the same, leads to a dividend yield of around 4.7%. Moreover, EPS is forecasted to fall to $1.16 in the upcoming year.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Unfortunately, it is really too early to view Bluegreen Vacations as a dividend investment. Last year was the company’s first dividend payment, so it is certainly early days. The standard practice for reliable payers is to look for 10 or so years of track record.
In terms of its peers, Bluegreen Vacations generates a yield of 4.7%, which is high for Hospitality stocks.
Taking into account the dividend metrics, Bluegreen Vacations ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. 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. There are three fundamental factors you should look at:
- Future Outlook: What are well-informed industry analysts predicting for BXG’s future growth? Take a look at our free research report of analyst consensus for BXG’s outlook.
- Valuation: What is BXG 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 BXG 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.
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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.