Are You An Income Investor? Don’t Miss Out On Meggitt PLC (LON:MGGT)
There is a lot to be liked about Meggitt PLC (LSE:MGGT) as an income stock, over the past 10 years it has returned an average of 3.00% per year. The company is currently worth UK£3.73B, and now yields roughly 3.26%. Let’s dig deeper into whether Meggitt should have a place in your portfolio. View our latest analysis for Meggitt
How I analyze a dividend stock
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 risen in the past couple of years?
Is its earnings sufficient to payout dividend at the current rate?
Will the company be able to keep paying dividend based on the future earnings growth?
How well does Meggitt fit our criteria?
The company currently pays out 35.06% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. Going forward, analysts expect MGGT’s payout to increase to 51.29% of its earnings, which leads to a dividend yield of 3.65%. However, EPS is forecasted to fall to £0.23 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income. 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. In the case of MGGT it has increased its DPS from £0.08 to £0.16 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock. Compared to its peers, Meggitt has a yield of 3.26%, which is high for Aerospace & Defense stocks but still below the market’s top dividend payers.
Next Steps:
Keeping in mind the dividend characteristics above, Meggitt is definitely worth considering for investors looking to build a dedicated income portfolio. 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 key aspects you should look at:
Future Outlook: What are well-informed industry analysts predicting for MGGT’s future growth? Take a look at our free research report of analyst consensus for MGGT’s outlook.
Valuation: What is MGGT 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 MGGT 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.
