Should Income Investors Buy Quest Diagnostics Incorporated (NYSE:DGX) Before Its Ex-Dividend?
If you are interested in cashing in on Quest Diagnostics Incorporated’s (NYSE:DGX) upcoming dividend of $0.5 per share, you only have 3 days left to buy the shares before its ex-dividend date, 03 April 2018, in time for dividends payable on the 18 April 2018. What does this mean for current shareholders and potential investors? Below, I will explain how holding Quest Diagnostics can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes. Check out our latest analysis for Quest Diagnostics
5 checks you should use to assess a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
Is it the top 25% annual dividend yield payer?
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?
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?
Does Quest Diagnostics pass our checks?
Quest Diagnostics has a trailing twelve-month payout ratio of 32.07%, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect DGX’s payout to fall to 28.67% of its earnings, which leads to a dividend yield of around 2.01%. However, EPS should increase to $5.8, 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. DGX has increased its DPS from $0.4 to $2 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. These are all positive signs of a great, reliable dividend stock. Compared to its peers, Quest Diagnostics produces a yield of 1.99%, which is high for Healthcare stocks but still below the market’s top dividend payers.
Next Steps:
With these dividend metrics in mind, I definitely rank Quest Diagnostics 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, 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 important factors you should further research:
Future Outlook: What are well-informed industry analysts predicting for DGX’s future growth? Take a look at our free research report of analyst consensus for DGX’s outlook.
Valuation: What is DGX 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 DGX 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.
