Have you been keeping an eye on Clarkson PLC’s (LON:CKN) upcoming dividend of UK£0.24 per share payable on the 21 September 2018? Then you only have 2 days left before the stock starts trading ex-dividend on the 06 September 2018. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at Clarkson’s most recent financial data to examine its dividend characteristics in more detail.
5 questions to ask before buying 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?
- Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
- Has dividend per share risen in the past couple of years?
- Does earnings amply cover its dividend payments?
- Will it be able to continue to payout at the current rate in the future?
How well does Clarkson fit our criteria?
The current trailing twelve-month payout ratio for the stock is 76.7%, which means that the dividend is covered by earnings. However, going forward, analysts expect CKN’s payout to fall to 61.7% of its earnings, which leads to a dividend yield of 2.9%. However, EPS should increase to £1.1, 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. CKN has increased its DPS from £0.42 to £0.73 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.
Relative to peers, Clarkson produces a yield of 2.6%, which is on the low-side for Shipping stocks.
With these dividend metrics in mind, I definitely rank Clarkson as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. Given that this is purely a dividend analysis, 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. I’ve put together three relevant aspects you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for CKN’s future growth? Take a look at our free research report of analyst consensus for CKN’s outlook.
- Valuation: What is CKN 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 CKN 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 firstname.lastname@example.org.