Is Chemical Financial Corporation (NASDAQ:CHFC) A Smart Choice For Dividend Investors?
Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. Chemical Financial Corporation (NASDAQ:CHFC) has returned to shareholders over the past 10 years, an average dividend yield of 3.00% annually. Should it have a place in your portfolio? Let’s take a look at Chemical Financial in more detail.
Check out our latest analysis for Chemical Financial
5 checks you should do on a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
Is their annual yield among the top 25% of dividend payers?
Has it paid dividend every year without dramatically reducing payout in the past?
Has dividend per share risen in the past couple of years?
Is is able to pay the current rate of dividends from its earnings?
Will the company be able to keep paying dividend based on the future earnings growth?
How well does Chemical Financial fit our criteria?
The current trailing twelve-month payout ratio for the stock is 41.86%, which means that the dividend is covered by earnings. However, going forward, analysts expect CHFC’s payout to fall to 31.67% of its earnings, which leads to a dividend yield of around 2.33%. However, EPS should increase to $4.17, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
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. Although CHFC’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Investors have seen reductions in the dividend per share in the past, although, it has picked up again.
Relative to peers, Chemical Financial has a yield of 2.36%, which is on the low-side for Banks stocks.
Next Steps:
Considering the dividend attributes we analyzed above, Chemical Financial is definitely worth keeping an eye on for someone looking to build a dedicated income portfolio. 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 essential aspects you should further examine:
Future Outlook: What are well-informed industry analysts predicting for CHFC’s future growth? Take a look at our free research report of analyst consensus for CHFC’s outlook.
Valuation: What is CHFC 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 CHFC is currently mispriced by the market.
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 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.
