How Does KION GROUP AG (ETR:KGX) Fare As A Dividend Stock?
Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. KION GROUP AG (ETR:KGX) has paid a dividend to shareholders in the last few years. It currently yields 1.8%. Let’s dig deeper into whether KION GROUP should have a place in your portfolio.
See our latest analysis for KION GROUP
5 questions I ask before picking 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 the amount of dividend per share grown over the past?
Is its earnings sufficient to payout dividend at the current rate?
Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
Does KION GROUP pass our checks?
The company currently pays out 27.2% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect KGX’s payout to remain around the same level at 29.6% of its earnings, which leads to a dividend yield of around 2.4%. Moreover, EPS should increase to €3.66.
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.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Unfortunately, it is really too early to view KION GROUP 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.
In terms of its peers, KION GROUP has a yield of 1.8%, which is on the low-side for Machinery stocks.
Next Steps:
Taking all the above into account, KION GROUP is a complicated pick for dividend investors given that there are a couple of positive things about it as well as negative. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. 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 essential factors you should look at:
Future Outlook: What are well-informed industry analysts predicting for KGX’s future growth? Take a look at our free research report of analyst consensus for KGX’s outlook.
Valuation: What is KGX 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 KGX 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.
