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Is Buying H&R Block Inc (NYSE:HRB) For Its Upcoming US$0.25 Dividend A Good Choice?

Matthew Smith

Important news for shareholders and potential investors in H&R Block Inc (NYSE:HRB): The dividend payment of US$0.25 per share will be distributed into shareholder on 01 October 2018, and the stock will begin trading ex-dividend at an earlier date, 11 September 2018. Should you diversify into H&R Block 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 H&R Block

What Is A Dividend Rock Star?

It is a stock that pays a reliable and steady dividend over the past decade, at a rate that is competitive relative to the other dividend-paying companies on the market. More specifically:

  • It is paying an annual yield above 75% of dividend payers
  • It consistently pays out dividend without missing a payment or significantly cutting payout
  • Its has increased its dividend per share amount over the past
  • It is able to pay the current rate of dividends from its earnings
  • It is able to continue to payout at the current rate in the future

High Yield And Dependable

H&R Block’s dividend yield stands at 3.7%, which is high for Consumer Services stocks. But the real reason H&R Block stands out is because it has a proven track record of continuously paying out this level of dividends, from earnings, to shareholders and can be expected to continue paying in the future. This is a highly desirable trait for a stock holding if you’re investor who wants a robust cash inflow from your portfolio over a long period of time.

NYSE:HRB Historical Dividend Yield September 6th 18

If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. In the case of HRB it has increased its DPS from $0.60 to $1 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock.

The current trailing twelve-month payout ratio for the stock is 33.5%, which means that the dividend is covered by earnings. Going forward, analysts expect HRB’s payout to increase to 49.2% of its earnings, which leads to a dividend yield of 3.8%. However, EPS is forecasted to fall to $1.93 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.

Next Steps:

H&R Block’s strong dividend attributes make it, without a doubt, a stock dividend investors should be considering for their portfolios. However, given this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. I’ve put together three key factors you should further examine:

  1. Future Outlook: What are well-informed industry analysts predicting for HRB’s future growth? Take a look at our free research report of analyst consensus for HRB’s outlook.
  2. Valuation: What is HRB 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 HRB is currently mispriced by the market.
  3. Other Dividend Rockstars: Are there strong dividend payers with better 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.