Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. Over the past 7 years, ED Invest Spólka Akcyjna (WSE:EDI) has returned an average of 26.00% per year to shareholders in terms of dividend yield. Does ED Invest Spólka Akcyjna tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. See our latest analysis for ED Invest Spólka Akcyjna
5 checks you should use to assess a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
Is its annual yield among the top 25% of dividend-paying companies?
Does it consistently pay out dividends without missing a payment of significantly cutting payout?
Has dividend per share risen in the past couple of years?
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 ED Invest Spólka Akcyjna pass our checks?
The company currently pays out 38.36% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward.
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. The reality is that it is too early to consider ED Invest Spólka Akcyjna as a dividend investment. It has only been consistently paying dividends for 7 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
In terms of its peers, ED Invest Spólka Akcyjna generates a yield of 5.79%, which is high for Real Estate stocks but still below the market’s top dividend payers.
After digging a little deeper into ED Invest Spólka Akcyjna’s yield, it’s easy to see why you should be cautious investing in the company just for the dividend. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. I’ve put together three pertinent factors you should look at:
Future Outlook: What are well-informed industry analysts predicting for EDI’s future growth? Take a look at our free research report of analyst consensus for EDI’s outlook.
Valuation: What is EDI 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 EDI 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 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.