Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. George Weston Limited (TSX:WN) has returned to shareholders over the past 10 years, an average dividend yield of 2.00% annually. Should it have a place in your portfolio? Let’s take a look at George Weston in more detail. See our latest analysis for George Weston
5 questions to ask before buying a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
- Is their annual yield among the top 25% of dividend payers?
- Has it paid dividend every year without dramatically reducing payout in the past?
- Has the amount of dividend per share grown over the past?
- Can it afford 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 George Weston fit our criteria?
George Weston has a trailing twelve-month payout ratio of 29.54%, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect WN’s payout to fall to 26.17% of its earnings, which leads to a dividend yield of 1.96%. Moreover, EPS is also forecasted to fall to CA$5.6 in the upcoming year. The lower EPS on top of a lower payout ratio will lead to a fall in dividend payment moving forward. 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. WN has increased its DPS from CA$1.44 to CA$1.96 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. This is an impressive feat, which makes WN a true dividend rockstar. Relative to peers, George Weston produces a yield of 1.90%, which is high for Consumer Retailing stocks but still below the low risk savings rate.
With this in mind, I definitely rank George Weston as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. Below, I’ve compiled three essential factors you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for WN’s future growth? Take a look at our free research report of analyst consensus for WN’s outlook.
- Valuation: What is WN 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 WN 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.
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.