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Should Emerald Expositions Events Inc (NYSE:EEX) Be Part Of Your Dividend Portfolio?

Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. Recently, Emerald Expositions Events Inc (NYSE:EEX) has started paying dividends to shareholders. Today it yields 2.6%. Should it have a place in your portfolio? Let’s take a look at Emerald Expositions Events in more detail.

See our latest analysis for Emerald Expositions Events

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?

  • Has it paid dividend every year without dramatically reducing payout in the past?

  • Has the amount of dividend per share grown over the past?

  • Can it afford to pay the current rate of dividends from its earnings?

  • Based on future earnings growth, will it be able to continue to payout dividend at the current rate?

NYSE:EEX Historical Dividend Yield November 13th 18
NYSE:EEX Historical Dividend Yield November 13th 18

Does Emerald Expositions Events pass our checks?

The current trailing twelve-month payout ratio for the stock is 20%, which means that the dividend is covered by earnings. Going forward, analysts expect EEX’s payout to increase to 24% of its earnings, which leads to a dividend yield of around 2.5%. However, EPS is forecasted to fall to $0.76 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.

When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.

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. Unfortunately, it is really too early to view Emerald Expositions Events as a dividend investment. Last year was the company’s first dividend payment, so it is certainly early days. The standard practice for reliable payers is to look for 10 or so years of track record.

Compared to its peers, Emerald Expositions Events produces a yield of 2.6%, which is high for Media stocks but still below the market’s top dividend payers.

Next Steps:

If you are building an income portfolio, then Emerald Expositions Events is a complicated choice since it has some positive aspects as well as negative ones. 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 recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. I’ve put together three fundamental aspects you should further examine:

  1. Future Outlook: What are well-informed industry analysts predicting for EEX’s future growth? Take a look at our free research report of analyst consensus for EEX’s outlook.

  2. Valuation: What is EEX 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 EEX is currently mispriced by the market.

  3. 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.