Important news for shareholders and potential investors in Digirad Corporation (NASDAQ:DRAD): The dividend payment of $0.06 per share will be distributed into shareholder on 28 February 2018, and the stock will begin trading ex-dividend at an earlier date, 14 February 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine Digirad’s latest financial data to analyse its dividend characteristics. See our latest analysis for Digirad
5 checks you should use to assess a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
- Does it pay an annual yield higher than 75% of dividend payers?
- Has it paid dividend every year without dramatically reducing payout in the past?
- Has dividend per share amount increased over the past?
- Is its earnings sufficient to payout dividend at the current rate?
- Will it have the ability to keep paying its dividends going forward?
Does Digirad pass our checks?
The current payout ratio for DRAD is negative, which means that it is loss-making, and paying its dividend from its retained earnings. 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 Digirad as a dividend investment. It has only been consistently paying dividends for 4 years, however, standard practice for reliable payers is to look for a 10-year minimum track record. Compared to its peers, Digirad produces a yield of 9.57%, which is high for Healthcare stocks.
After digging a little deeper into Digirad’s yield, it’s easy to see why you should be cautious investing in the company just for the dividend. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. 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. Below, I’ve compiled three fundamental factors you should further examine:
- 1. Future Outlook: What are well-informed industry analysts predicting for DRAD’s future growth? Take a look at our free research report of analyst consensus for DRAD’s outlook.
- 2. Valuation: What is DRAD 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 DRAD is currently mispriced by the market.
- 3. 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.