Dividends can be underrated but they form a large part of investment returns, playing an important role in compounding returns in the long run. In the past, Bravura Solutions Limited (ASX:BVS) has returned an average of 3.00% per year to investors in the form of dividend payouts. Let’s dig deeper into whether Bravura Solutions should have a place in your portfolio. See our latest analysis for Bravura Solutions
Here’s how I find good dividend stocks
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
- Is it paying an annual yield above 75% of dividend payers?
- Does it consistently pay out dividends without missing a payment of significantly cutting payout?
- Has dividend per share amount increased over the past?
- Is it able 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?
Does Bravura Solutions pass our checks?
The current trailing twelve-month payout ratio for the stock is 75.89%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a payout ratio of 72.79%, leading to a dividend yield of around 3.41%. In addition to this, EPS should increase to A$0.13. If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. The reality is that it is too early to consider Bravura Solutions as a dividend investment. It has only been paying out dividend for the past one year. Generally, the rule of thumb for determining whether a stock is a reliable dividend payer is that it should be consistently paying dividends for the past 10 years or more. Clearly there’s a long road ahead before we can ascertain whether BVS one as a stable dividend player. In terms of its peers, Bravura Solutions has a yield of 3.28%, which is high for Software stocks but still below the market’s top dividend payers.
If Bravura Solutions is in your portfolio for cash-generating reasons, there may be better alternatives out there. 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, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. There are three relevant aspects you should further research:
- Future Outlook: What are well-informed industry analysts predicting for BVS’s future growth? Take a look at our free research report of analyst consensus for BVS’s outlook.
- Historical Performance: What has BVS’s returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- 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.