Over the past 10 years ElringKlinger AG (FRA:ZIL2) has been paying dividends to shareholders. The stock currently pays out a dividend yield of 6.3%, and has a market cap of €507m. Should it have a place in your portfolio? Let’s take a look at ElringKlinger in more detail.
Here’s how I find good dividend stocks
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?
Does it consistently pay out dividends without missing a payment of significantly cutting payout?
Has it increased its dividend per share amount over the past?
Can it afford 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 ElringKlinger fit our criteria?
ElringKlinger has a trailing twelve-month payout ratio of 52%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting lower payout ratio of 36%, leading to a dividend yield of 5.4%. However, EPS should increase to €1.08, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
When considering the sustainability of dividends, it is also worth checking the cash flow of a company. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Investors have seen reductions in the dividend per share in the past, although, it has picked up again.
Relative to peers, ElringKlinger produces a yield of 6.3%, which is high for Auto Components stocks.
With these dividend metrics in mind, I definitely rank ElringKlinger 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, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. I’ve put together three relevant factors you should further research:
Future Outlook: What are well-informed industry analysts predicting for ZIL2’s future growth? Take a look at our free research report of analyst consensus for ZIL2’s outlook.
Historical Performance: What has ZIL2’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.
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 email@example.com.