Consider This Before Buying ACCO Brands Corporation (NYSE:ACCO) For The 3.6% Dividend
Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. ACCO Brands Corporation (NYSE:ACCO) has started paying a dividend to shareholders. It currently trades on a yield of 3.6%. Should it have a place in your portfolio? Let’s take a look at ACCO Brands in more detail.
View our latest analysis for ACCO Brands
Here’s how I find good dividend stocks
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
Is it the top 25% annual dividend yield payer?
Does it consistently pay out dividends without missing a payment of significantly cutting payout?
Has dividend per share amount increased over the past?
Can it afford to pay the current rate of dividends from its earnings?
Will it be able to continue to payout at the current rate in the future?
How well does ACCO Brands fit our criteria?
ACCO Brands has a trailing twelve-month payout ratio of 13%, which means that the dividend is covered by earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.
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. The reality is that it is too early to consider ACCO Brands as a dividend investment. Last year was the company’s first dividend payment, so it is certainly early days. The standard practice for reliable payers is to look for 10 or so years of track record.
In terms of its peers, ACCO Brands generates a yield of 3.6%, which is high for Commercial Services stocks but still below the market’s top dividend payers.
Next Steps:
After digging a little deeper into ACCO Brands’s yield, it’s easy to see why you should be cautious investing in the company just for the dividend. On the other hand, if you are not strictly just a dividend investor, the stock could still be offering some interesting investment opportunities. 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. There are three relevant factors you should further examine:
Future Outlook: What are well-informed industry analysts predicting for ACCO’s future growth? Take a look at our free research report of analyst consensus for ACCO’s outlook.
Valuation: What is ACCO 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 ACCO is currently mispriced by the market.
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.
