Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. Historically, Etn Fr Colruyt NV (EBR:COLR) has been paying a dividend to shareholders. Today it yields 2.2%. Should it have a place in your portfolio? Let’s take a look at Etn. Fr. Colruyt 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?
- Has it paid dividend every year without dramatically reducing payout in the past?
- Has dividend per share risen in the past couple of years?
- Is its earnings sufficient to payout dividend at the current rate?
- Will it be able to continue to payout at the current rate in the future?
How well does Etn. Fr. Colruyt fit our criteria?
The current trailing twelve-month payout ratio for the stock is 47%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a payout ratio of 46%, leading to a dividend yield of 2.1%. Moreover, EPS should increase to €2.62.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.
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. In the case of COLR it has increased its DPS from €0.74 to €1.22 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. This is an impressive feat, which makes COLR a true dividend rockstar.
In terms of its peers, Etn. Fr. Colruyt generates a yield of 2.2%, which is on the low-side for Consumer Retailing stocks.
With this in mind, I definitely rank Etn. Fr. Colruyt as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. 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 essential aspects you should look at:
- Future Outlook: What are well-informed industry analysts predicting for COLR’s future growth? Take a look at our free research report of analyst consensus for COLR’s outlook.
- Valuation: What is COLR 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 COLR 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 email@example.com.