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Important news for shareholders and potential investors in Bristol-Myers Squibb Company (NYSE:BMY): The dividend payment of US$0.41 per share will be distributed to shareholders on 01 May 2019, and the stock will begin trading ex-dividend at an earlier date, 04 April 2019. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into Bristol-Myers Squibb's latest financial data to analyse its dividend attributes.
How I analyze a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
- Is it the top 25% annual dividend yield payer?
- Has it paid dividend every year without dramatically reducing payout in the past?
- Has the amount of dividend per share grown over the past?
- Can it afford to pay the current rate of dividends from its earnings?
- Will it have the ability to keep paying its dividends going forward?
How well does Bristol-Myers Squibb fit our criteria?
The current trailing twelve-month payout ratio for the stock is 53%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting lower payout ratio of 36% which, assuming the share price stays the same, leads to a dividend yield of around 3.6%. However, EPS should increase to $4, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
When considering the sustainability of dividends, it is also worth checking the cash flow of a company. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.
If there is one thing that you want to be reliable in your life, it's dividend stocks and their constant income stream. In the case of BMY it has increased its DPS from $1.24 to $1.64 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. This is an impressive feat, which makes BMY a true dividend rockstar.
In terms of its peers, Bristol-Myers Squibb produces a yield of 3.4%, which is high for Pharmaceuticals stocks but still below the market's top dividend payers.
Considering the dividend attributes we analyzed above, Bristol-Myers Squibb is definitely worth keeping an eye on for someone looking to build a dedicated income portfolio. 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 pertinent factors you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for BMY’s future growth? Take a look at our free research report of analyst consensus for BMY’s outlook.
- Valuation: What is BMY 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 BMY 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.