Does National CineMedia Inc (NASDAQ:NCMI) Have A Place In Your Dividend Portfolio?
A sizeable part of portfolio returns can be produced by dividend stocks due to their contribution to compounding returns in the long run. Over the past 10 years, National CineMedia Inc (NASDAQ:NCMI) has returned an average of 6.00% per year to shareholders in terms of dividend yield. Let’s dig deeper into whether National CineMedia should have a place in your portfolio. See our latest analysis for National CineMedia
5 questions I ask before picking a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
Is it paying an annual yield above 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?
Can it afford to pay the current rate of dividends from its earnings?
Will it have the ability to keep paying its dividends going forward?
How well does National CineMedia fit our criteria?
NCMI currently pays out twice what it is earning, according to its trailing twelve-month data, which suggests that the dividend is not well-covered by earnings by any means. Furthermore, analysts are forecasting the payout ratio to remain at this high level going forward, leading to a future of uncertainty around the stability of NCMI’s dividend income. 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 NCMI it has increased its DPS from $0.6 to $0.88 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock. Compared to its peers, National CineMedia produces a yield of 11.44%, which is high for Media stocks.
Next Steps:
Keeping in mind the dividend characteristics above, National CineMedia is definitely worth considering for investors looking to build a dedicated income 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. Below, I’ve compiled three fundamental aspects you should further examine:
Future Outlook: What are well-informed industry analysts predicting for NCMI’s future growth? Take a look at our free research report of analyst consensus for NCMI’s outlook.
Valuation: What is NCMI 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 NCMI 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 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.
