Important news for shareholders and potential investors in Telford Homes Plc (AIM:TEF): The dividend payment of £0.08 per share will be distributed into shareholder on 12 January 2018, and the stock will begin trading ex-dividend at an earlier date, 14 December 2017. Is this future income a persuasive enough catalyst for investors to think about TEF as an investment today? Below, 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 Telford Homes
5 checks you should do on a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
- Is their annual yield among the top 25% of dividend payers?
- Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
- 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 Telford Homes fare?
The current payout ratio for the stock is 45.44%, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect TEF’s payout to fall to 33.21% of its earnings, which leads to a dividend yield of around 4.67%. However, EPS should increase to £0.51, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Investors have seen reductions in the dividend per share in the past, although, it has picked up again. Compared to its peers, TEF generates a yield of 3.85%, which is on the low-side for household durables stocks.
What this means for you:
Are you a shareholder?
Are you a shareholder? With Telford Homes producing strong dividend income for your portfolio over the past few years, you can take comfort in knowing that this stock will still continue to be a robust dividend generator moving forward. However, depending on your current holdings, it may be valuable exploring other dividend stocks to improve your diversification, or even look at high-growth stocks to supplement your steady income stocks. I suggest continuing your research by taking a look at my interactive free list of dividend rockstars as well as high-growth stocks to potentially add to your holdings.
Are you a potential investor? With these dividend metrics in mind, I definitely rank Telford Homes as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. As with all investments, 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. No matter how much of a cash cow Telford Homes is, it is not worth an infinite price. Is TEF still a bargain? Take a look at our latest free analysis to find out!
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.