Is Buying Boral Limited (ASX:BLD) For Its Upcoming AU$0.14 Dividend A Good Choice?
On the 02 October 2018, Boral Limited (ASX:BLD) will be paying shareholders an upcoming dividend amount of AU$0.14 per share. However, investors must have bought the company’s stock before 04 September 2018 in order to qualify for the payment. That means you have only 2 days left! Should you diversify into Boral and boost your portfolio income stream? Well, keep on reading because today, I’m going to look at the latest data and analyze the stock and its dividend property in further detail.
Check out our latest analysis for Boral
5 questions I ask before picking a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
Does it pay an annual yield higher than 75% of dividend payers?
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?
Can it afford to pay the current rate of dividends from its earnings?
Will it be able to continue to payout at the current rate in the future?
How well does Boral fit our criteria?
The company currently pays out 72.2% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect BLD’s payout to fall to 62.4% of its earnings, which leads to a dividend yield of 4.5%. However, EPS should increase to A$0.43, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Dividend payments from Boral have been volatile in the past 10 years, with some years experiencing significant drops of over 25%. This means that dividend hunters should probably steer clear of the stock, at least for now until the track record improves.
Compared to its peers, Boral produces a yield of 4.0%, which is high for Basic Materials stocks but still below the market’s top dividend payers.
Next Steps:
Whilst there are few things you may like about Boral from a dividend stock perspective, the truth is that overall it probably is not the best choice for a dividend investor. 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. There are three relevant factors you should look at:
Future Outlook: What are well-informed industry analysts predicting for BLD’s future growth? Take a look at our free research report of analyst consensus for BLD’s outlook.
Valuation: What is BLD 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 BLD 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.
