A large part of investment returns can be generated by dividend-paying stock given their role in compounding returns over time. Over the past 10 years, Braemar Shipping Services plc (LON:BMS) has returned an average of 6.00% per year to shareholders in terms of dividend yield. Let’s dig deeper into whether Braemar Shipping Services should have a place in your portfolio. View out our latest analysis for Braemar Shipping Services
5 questions I ask before picking a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
- Is it the top 25% annual dividend yield payer?
- 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?
- Does earnings amply cover its dividend payments?
- Will it have the ability to keep paying its dividends going forward?
How does Braemar Shipping Services fare?
Braemar Shipping Services has a negative payout ratio, meaning that the company is not yet profitable and is paying dividend by dipping into its retained earnings.
If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. Dividend payments from Braemar Shipping Services have been volatile in the past 10 years, with some years experiencing significant drops of over 25%. These characteristics do not bode well for income investors seeking reliable stream of dividends.
In terms of its peers, Braemar Shipping Services generates a yield of 5.81%, which is high for Infrastructure stocks.
If Braemar Shipping Services is in your portfolio for cash-generating reasons, there may be better alternatives out there. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. 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 important aspects you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for BMS’s future growth? Take a look at our free research report of analyst consensus for BMS’s outlook.
- Valuation: What is BMS 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 BMS 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.