Should You Buy Global Brass and Copper Holdings Inc (NYSE:BRSS) For Its 1.1% Dividend?
A large part of investment returns can be generated by dividend-paying stock given their role in compounding returns over time. Historically, Global Brass and Copper Holdings Inc (NYSE:BRSS) has been paying a dividend to shareholders. Today it yields 1.1%. Does Global Brass and Copper Holdings tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis.
See our latest analysis for Global Brass and Copper Holdings
Here’s how I find good dividend stocks
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
Is its annual yield among the top 25% of dividend-paying companies?
Does it consistently pay out dividends without missing a payment of significantly cutting payout?
Has the amount of dividend per share grown over the past?
Is its earnings sufficient to payout dividend at the current rate?
Will it be able to continue to payout at the current rate in the future?
How does Global Brass and Copper Holdings fare?
The company currently pays out 11% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward.
When considering the sustainability of dividends, it is also worth checking the cash flow of a company. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.
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 Global Brass and Copper 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, Global Brass and Copper Holdings produces a yield of 1.1%, which is on the low-side for Machinery stocks.
Next Steps:
Now you know to keep in mind the reason why investors should be careful investing in Global Brass and Copper Holdings 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, 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. There are three fundamental aspects you should look at:
Future Outlook: What are well-informed industry analysts predicting for BRSS’s future growth? Take a look at our free research report of analyst consensus for BRSS’s outlook.
Valuation: What is BRSS 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 BRSS 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 past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
