Is Buying Williams-Sonoma Inc (NYSE:WSM) For Its Upcoming $0.39 Dividend A Good Choice?
On the 23 February 2018, Williams-Sonoma Inc (NYSE:WSM) will be paying shareholders an upcoming dividend amount of $0.39 per share. However, investors must have bought the company’s stock before 24 January 2018 in order to qualify for the payment. That means you have only 3 days left! Should you diversify into Williams-Sonoma 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 Williams-Sonoma
How I analyze a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
Is it paying an annual yield above 75% of dividend payers?
Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
Has dividend per share risen in the past couple of years?
Does earnings amply cover its dividend payments?
Will the company be able to keep paying dividend based on the future earnings growth?
How does Williams-Sonoma fare?
The current payout ratio for the stock is 43.19%, which means that the dividend is covered by earnings. Going forward, analysts expect WSM’s payout to increase to 48.37% of its earnings, which leads to a dividend yield of around 2.94%. Moreover, EPS should increase to $3.81. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors 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. In the case of WSM it has increased its DPS from $0.46 to $1.56 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. These are all positive signs of a great, reliable dividend stock. Compared to its peers, Williams-Sonoma generates a yield of 2.82%, which is high for specialty retail stocks but still below the market’s top dividend payers.
Next Steps:
Taking into account the dividend metrics, Williams-Sonoma ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. Given that 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. Below, I’ve compiled three important factors you should further research:
1. Future Outlook: What are well-informed industry analysts predicting for WSM’s future growth? Take a look at our free research report of analyst consensus for WSM’s outlook.
2. Valuation: What is WSM 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 WSM is currently mispriced by the market.
3. 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.
