Should Income Investors Buy Metro Inc (TSE:MRU) Before Its Ex-Dividend?
If you are interested in cashing in on Metro Inc’s (TSE:MRU) upcoming dividend of CA$0.18 per share, you only have 2 days left to buy the shares before its ex-dividend date, 04 September 2018, in time for dividends payable on the 26 September 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into Metro’s latest financial data to analyse its dividend attributes.
View our latest analysis for Metro
How I analyze a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
Is its annual yield among the top 25% of dividend-paying companies?
Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
Has dividend per share amount increased over the past?
Is its earnings sufficient to payout dividend at the current rate?
Will it be able to continue to payout at the current rate in the future?
Does Metro pass our checks?
The current trailing twelve-month payout ratio for the stock is 9.5%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a higher payout ratio of 25.4%, leading to a dividend yield of 1.8%. However, EPS is forecasted to fall to CA$2.92 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. MRU has increased its DPS from CA$0.17 to CA$0.72 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. This is an impressive feat, which makes MRU a true dividend rockstar.
Compared to its peers, Metro has a yield of 1.8%, which is high for Consumer Retailing stocks but still below the low risk savings rate.
Next Steps:
With these dividend metrics in mind, I definitely rank Metro as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. 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 fundamental aspects you should further research:
Future Outlook: What are well-informed industry analysts predicting for MRU’s future growth? Take a look at our free research report of analyst consensus for MRU’s outlook.
Valuation: What is MRU 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 MRU 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 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.
