How Does Schroders plc (LON:SDR) Fare As A Dividend Stock?
Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. In the past 10 years Schroders plc (LSE:SDR) has returned an average of 3.00% per year to investors in the form of dividend payouts. Does Schroders tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. Check out our latest analysis for Schroders
5 checks you should use to assess a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
Is its annual yield among the top 25% of dividend-paying companies?
Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
Has the amount of dividend per share grown over the past?
Is it able 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 Schroders fit our criteria?
The current trailing twelve-month payout ratio for the stock is 52.36%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a payout ratio of 50.73%, leading to a dividend yield of 3.40%. In addition to this, EPS is forecasted to fall to £2.13 in the upcoming year. If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. Although SDR’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Investors have seen reductions in the dividend per share in the past, although, it has picked up again. Relative to peers, Schroders produces a yield of 3.25%, which is high for Capital Markets stocks but still below the market’s top dividend payers.
Next Steps:
With these dividend metrics in mind, I definitely rank Schroders 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. Below, I’ve compiled three important aspects you should look at:
Future Outlook: What are well-informed industry analysts predicting for SDR’s future growth? Take a look at our free research report of analyst consensus for SDR’s outlook.
Valuation: What is SDR 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 SDR 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.
