Is Housing and Urban Development Corporation Limited (NSE:HUDCO) An Attractive Dividend Stock?
A large part of investment returns can be generated by dividend-paying stock given their role in compounding returns over time. Housing and Urban Development Corporation Limited (NSE:HUDCO) has started paying a dividend to shareholders. It currently trades on a yield of 1.3%. Should it have a place in your portfolio? Let’s take a look at Housing and Urban Development in more detail.
See our latest analysis for Housing and Urban Development
Here’s how I find good dividend stocks
If you are a dividend investor, you should always assess these five key metrics:
Is it the top 25% annual dividend yield payer?
Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
Has dividend per share amount increased over the past?
Can it afford 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?
Does Housing and Urban Development pass our checks?
The current trailing twelve-month payout ratio for the stock is 14%, meaning the dividend is sufficiently 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.
When considering the sustainability of dividends, it is also worth checking the cash flow of a company. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
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. Unfortunately, it is really too early to view Housing and Urban Development 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, Housing and Urban Development generates a yield of 1.3%, which is on the low-side for Diversified Financial stocks.
Next Steps:
After digging a little deeper into Housing and Urban Development’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, 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. I’ve put together three pertinent aspects you should look at:
Future Outlook: What are well-informed industry analysts predicting for HUDCO’s future growth? Take a look at our free research report of analyst consensus for HUDCO’s outlook.
Valuation: What is HUDCO 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 HUDCO 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 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.
