Important news for shareholders and potential investors in Equitable Group Inc (TSE:EQB): The dividend payment of CA$0.27 per share will be distributed to shareholders on 04 October 2018, and the stock will begin trading ex-dividend at an earlier date, 13 September 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 Equitable Group’s most recent financial data to examine its dividend characteristics in more detail.
5 checks you should do on a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
- Is their annual yield among the top 25% of dividend payers?
- Has it paid dividend every year without dramatically reducing payout in the past?
- Has dividend per share risen in the past couple of years?
- 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?
How does Equitable Group fare?
The current trailing twelve-month payout ratio for the stock is 11.1%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a payout ratio of 11.2%, leading to a dividend yield of around 1.7%. Furthermore, EPS should increase to CA$10.12.
If you want to dive deeper into the sustainability of a certain payout ratio, you may wish to consider the cash flow of the business. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.
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. In the case of EQB it has increased its DPS from CA$0.40 to CA$1.08 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 EQB a true dividend rockstar.
In terms of its peers, Equitable Group generates a yield of 1.6%, which is on the low-side for Mortgage stocks.
Keeping in mind the dividend characteristics above, Equitable Group is definitely worth considering for investors 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. There are three essential factors you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for EQB’s future growth? Take a look at our free research report of analyst consensus for EQB’s outlook.
- Valuation: What is EQB 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 EQB 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 firstname.lastname@example.org.