How Does SG Fleet Group Limited (ASX:SGF) Fare As A Dividend Stock?
A sizeable part of portfolio returns can be produced by dividend stocks due to their contribution to compounding returns in the long run. SG Fleet Group Limited (ASX:SGF) has recently paid dividends to shareholders, and currently yields 6.1%. Should it have a place in your portfolio? Let’s take a look at SG Fleet Group in more detail.
Check out our latest analysis for SG Fleet Group
Here’s how I find good dividend stocks
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
Is it the top 25% annual dividend yield payer?
Has it paid dividend every year without dramatically reducing payout in the past?
Has dividend per share risen in the past couple of years?
Does earnings amply cover its dividend payments?
Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How does SG Fleet Group fare?
The current trailing twelve-month payout ratio for the stock is 71%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a payout ratio of 66%, leading to a dividend yield of 6.6%.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Unfortunately, it is really too early to view SG Fleet 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.
Compared to its peers, SG Fleet Group generates a yield of 6.1%, which is high for Commercial Services stocks.
Next Steps:
Considering the dividend attributes we analyzed above, SG Fleet Group is definitely worth keeping an eye on for someone looking to build a dedicated income portfolio. 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 key aspects you should look at:
Future Outlook: What are well-informed industry analysts predicting for SGF’s future growth? Take a look at our free research report of analyst consensus for SGF’s outlook.
Valuation: What is SGF 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 SGF 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 editorial-team@simplywallst.com.
