If you are interested in cashing in on Mercer International Inc’s (NASDAQ:MERC) upcoming dividend of US$0.13 per share, you only have 1 days left to buy the shares before its ex-dividend date, 26 June 2018, in time for dividends payable on the 06 July 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 Mercer International’s most recent financial data to examine its dividend characteristics in more detail. Check out our latest analysis for Mercer International
5 checks you should use to assess a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
- Is their annual yield among the top 25% of dividend payers?
- Does it consistently pay out dividends without missing a payment of significantly cutting payout?
- 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?
Does Mercer International pass our checks?
The current trailing twelve-month payout ratio for the stock is 36.10%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting lower payout ratio of 31.99%, leading to a dividend yield of 3.20%. However, EPS should increase to $1.87, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. The reality is that it is too early to consider Mercer International as a dividend investment. It has only been consistently paying dividends for 3 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
Compared to its peers, Mercer International produces a yield of 3.11%, which is high for Forestry stocks but still below the market’s top dividend payers.
Whilst there are few things you may like about Mercer International from a dividend stock perspective, the truth is that overall it probably is not the best choice for a dividend investor. 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. I’ve put together three pertinent aspects you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for MERC’s future growth? Take a look at our free research report of analyst consensus for MERC’s outlook.
- Valuation: What is MERC 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 MERC 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.