Should Income Investors Buy Coca-Cola European Partners plc (AMS:CCE) Before Its Ex-Dividend?
Have you been keeping an eye on Coca-Cola European Partners plc’s (AMS:CCE) upcoming dividend of €0.26 per share payable on the 06 September 2018? Then you only have 2 days left before the stock starts trading ex-dividend on the 21 August 2018. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at Coca-Cola European Partners’s most recent financial data to examine its dividend characteristics in more detail.
See our latest analysis for Coca-Cola European Partners
5 questions to ask before buying a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
Does it pay an annual yield higher than 75% of dividend payers?
Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
Has it increased its dividend per share amount over the past?
Does earnings amply cover its dividend payments?
Will it have the ability to keep paying its dividends going forward?
How well does Coca-Cola European Partners fit our criteria?
The current trailing twelve-month payout ratio for the stock is 69.01%, which means that the dividend is covered by earnings. However, going forward, analysts expect CCE’s payout to fall to 46.72% of its earnings, which leads to a dividend yield of around 3.14%. However, EPS should increase to €2.23, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. The reality is that it is too early to consider Coca-Cola European Partners as a dividend investment. It has only been consistently paying dividends for 2 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
Compared to its peers, Coca-Cola European Partners generates a yield of 2.78%, which is on the low-side for Beverage stocks.
Next Steps:
Taking all the above into account, Coca-Cola European Partners is a complicated pick for dividend investors given that there are a couple of positive things about it as well as negative. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. 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. There are three key factors you should look at:
Future Outlook: What are well-informed industry analysts predicting for CCE’s future growth? Take a look at our free research report of analyst consensus for CCE’s outlook.
Valuation: What is CCE 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 CCE 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.
